Budget 2021: A Pandemic Response Without a Just Recovery

Chrystia Freeland made history on April 19 as the first woman Finance Minister to deliver a federal budget in Canada’s House of Commons. The symbolism of this budget presentation was important. But despite very significant investments in social, economic, and environmental measures, it does not go the distance in bringing about a just recovery.

Indeed, “Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience” delivered historic investments in early learning and childcare and recognized the critical role a national childcare system would play in creating a stronger, more equitable economy.

Long-awaited and critical investments towards the goal of $10-a-day childcare fees are to be celebrated, but this government must understand that even this historic program cannot quell the demand for a holistic reform of our economic systems and social safety net.

Commitments to expanding and extending Employment Insurance and other emergency benefits are also welcome announcements critical for our recovery. At the same time, the lack of ambition in transferring these benefits (rife with issues of eligibility and inadequacy) to a robust basic income guarantee means many people will continue to fall through the cracks.

Investments in the rapid housing initiative were increased by $1.5 billion, which is once again welcome and substantial. The current housing crisis, however, means that more is still urgently needed.

Similarly, this budget included certain progressive tax reforms, including taxes on vacant properties; luxury cars, boats, and planes; and some corporate tax measures for tech giants. This must be broadened, however, to include a  wealth tax and changes to corporate tax rates.

No specific investments at all were announced for pharmacare.

Despite significant supports to stabilize Canada’s economy through the remainder of the COVID-19 pandemic, Budget 2021 marks a lost opportunity to transform our economy in a way that would fix the underlying inequity in our systems.

In her budget delivery speech, Minister Freeland stated, “We are not suffering because of endogenous flaws or imbalances within our economy. Rather, the COVID recession is driven by an entirely external event.” But the inequitable experiences of this recession are not due to external factors. The Finance Minister’s refusal to acknowledge the pervasive faults in our systems reinforces an approach whereby patchwork policies are consistently chosen over meaningful systemic reform.

This government certainly deserves credit for the unprecedented investments announced for a national childcare program and previous measures like the first National Housing Strategy, Poverty Reduction Strategy, and improved Canada Child Benefits and seniors benefits. What dampens CPJ’s enthusiasm about what has been accomplished and promised by this government is a stubborn lack of ambition or concern to move beyond incremental changes when broader solutions are so desperately needed and well within reach. This government appears satisfied with offering a few high profile programs or promises, without actually changing the status quo.

Budget 2021 is indicative of the problematic belief that people simply need better pathways into the labour force to solve economic inequality. Childcare will allow more parents to join the workforce. A $15/hour minimum wage was promised and that will help too. The government reiterated their commitment to creating one million new jobs. Investments were announced to support the re-hiring of employees laid off during the pandemic as well as new hires. The federal wage subsidy was extended. Even the Express Entry System for immigrants focuses on offering permanent residency based on the needs of Canada’s labour market. Likewise, financial support for racialized newcomer women is directed to helping them find employment and achieve career advancement.

Improving access to employment and supporting workers is indeed an essential component of economic well-being. But as COVID-19 has so starkly demonstrated, many essential workers face grave risks and inequitable health and economic outcomes precisely because of their working conditions and other injustices within our systems. This budget also does little to address the needs of those outside the labour market.

Budget 2021 neither acknowledges nor offers solutions to the exploitative nature of the Canadian economy. The devastating impacts of putting profit ahead of people and the planet have only been magnified as a result of the pandemic. Racism, environmental degradation, and a disregard of fundamental human rights are longstanding issues that have been brought increasingly into public view.

Much like the government’s approach to socio-economic measures, climate spending is at once unprecedented and completely insufficient.

CPJ agrees that “COVID-19 has shown us how Canadians have what it takes to come together, to mobilize, and to take action in the face of a crisis,” and that this is the moment for a “global transformation to a green, clean economy.”

One of the most alarming elements of Budget 2021 is that the government is using language that suggests it does understand the severity of the climate crisis and the need for more accelerated and extensive measures to address it. But it stops short of setting targets, making investments, or defining regulations that are aligned with the scientific imperative of climate action.

We applaud the historic investments in public transit and clean transportation, green infrastructure, climate-resilient agriculture, energy efficiency, and climate adaptation. We are also encouraged by the framework provided by both the Apprenticeship Service Fund and Community Workforce Development Program with their emphasis on transition and meeting the needs of populations traditionally excluded from secure, well-paying jobs—though funding for these programs remains very modest.

Taken together, these measures are said to correspond with emission reductions of 36 per cent below 2005 levels by 2030. This target in itself is a step forward (to which another step was added when Canada announced a target of 40-45 per cent reductions at the Biden climate summit on April 22). Again, however, it is nowhere near Canada’s fair share contribution to global efforts to address climate change by reducing emissions to at least 60% below 2005 levels by 2030.

Yet the extensive supports to the oil and gas sector make it clear that the federal government has yet to grasp the severity and urgency of the global climate crisis or the devastating ramifications of inadequate action.

Calculations by the Canadian Centre for Policy Alternatives indicate that Budget 2021 names approximately $41 billion for measures related to environmental protection and greening the economy over the next five-to-seven years. Unfortunately, less than $8 billion is new money allocated towards emissions-reduction measures. What is more, contained within that allocation are funds for fossil fuel-derived hydrogen fuels and unproven carbon capture, sequestration, and storage technologies.

Throughout this pandemic, CPJ has advocated for policy solutions that would put us on track to a “just recovery” that would promote the resiliency of communities and ecosystems here in Canada, as well as taking responsibility for the impact of our actions around the world.

Both COVID and climate change are international crises, and Canada must honour our obligations to the Global South. Our international climate finance commitments have expired. These must be renewed and expanded to support climate adaptation and mitigation measures in the Global South. This is doubly important in the context of the pandemic.

CPJ will continue to advocate for ambitious, complementary, rights-based policies that work together to build the just and sustainable future we need. We will continue to give credit where credit is due, and celebrate the wins along the way, but we will not be satisfied with a single-plank solution, no matter how critical that one plank is. We demand more, because we need it, because we can do it, and because everyone in Canada deserves to flourish.

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