On March 28, Canadian finance minister Chrystia Freeland unveiled the 2023 federal budget, hailing it as a “historic opportunity.” The budget was widely anticipated to include major green energy incentives in response to President Joe Biden’s Inflation Reduction Act (IRA). It delivered on this front, providing Can$20.9 billion over six years bundled in a series of tax credits for clean electricity, clean hydrogen, and clean technology manufacturing. However, the overall budget is a mixed bag, with its climate initiatives serving as a proxy for other half measures contained therein. On matters of importance for working people — such as housing and public sector wages — the budget appears to be a total failure.
Environmentalist organizations, for starters, were ambivalent about the climate plans outlined in the budget. Keith Stewart, energy strategist for Greenpeace Canada, said the group “welcomes the unprecedented federal investments in greening the grid, which will be critical as we phase out fossil fuels by replacing them with electricity from renewable energy sources.” However, he cautioned, the budget outlines continued plans to subsidize oil and gas companies, sending mixed messages. “No money in the world could convince oil companies to become good actors on climate change, so it would be far more effective to simply regulate their emissions and invest scarce public funds into accelerating investments in efficiency and electrification,” Stewart added.
Equiterre, the environmentalist NGO where Environment Minister Steven Guilbeault worked before he entered politics, criticized the budget’s dependence on unproven carbon and storage technology, which allows oil and gas companies to continue production unabated. Equiterre’s director of government relations Marc-André Viau said:
This budget is in line with the government’s environmental vision, which aims to achieve its environmental objectives through a combination of clean and less clean technologies. Some announced measures such as the decarbonization of electricity networks are promising, but some, such as the significant financing of carbon capture and storage, are causing perplexity.
Furthermore, the budget doesn’t contain any investments in public transit. The clean transportation program manager for Environmental Defence Canada, Nate Wallace, warned that a lack of funding in emissions-reducing public transit will lead to a “death spiral” of service cuts and fare increases that will “push people into their cars.” Wallace expressed hope that the government’s coming update on permanent transit funding, expected later this year, will address funding shortfalls, but noted that these investments are needed immediately. He did, however, applaud the federal government’s investment in zero-emission vehicle manufacturing as a “measured response” to the IRA.
Concessions to the New Democratic Party
Another major component of the budget is $13 billion for the expansion of a means-tested dental-care program for those who make less than $90,000, which was a key piece of the federal Liberals’ agreement with the left-leaning New Democratic Party (NDP). The NDP committed to support the Liberal minority government until 2025 in exchange for certain concessions under the agreement.
In 2022, the federal government created a temporary dental benefit cash payment for children under twelve, in families under the income threshold, which will be replaced next year with a government insurance program. This year, eligibility will expand to people under eighteen, seniors, and people with disabilities who fall below the income threshold and lack private insurance. By 2025, everyone in households earning less than $90,000 will become eligible.
To address rising inflation, the budget includes a onetime “grocery rebate” on the federal Goods and Services Tax, which will provide families with two children up to $467, seniors $225, and single people $234 to help them pay for groceries. This year’s average monthly grocery bill, for a family of four, is expected to be $1,357. The NDP has inexplicably touted this meager spending — which Freeland described as “narrowly focused and fiscally responsible” — as a win for affordability.
Pharmacare, another important Liberal concession for the NDP’s support, remains absent from the budget. NDP leader Jagmeet Singh acknowledges that this won’t come to fruition before the expiration of their deal, but continues to prop up the Liberal government nonetheless. Evidently, Singh believes that there is merit in focusing on the affordability, climate, and dental-care half measures, in spite of the fact that the Liberals were likely to implement these items anyways. It is likely that the Liberals will outline a framework for implementing a pharmacare system — just in time for the next election. This will maintain the party’s perennial promise of pharmacare, a pledge they’ve been making for the past quarter century.
No Money for Housing
The Canadian Alliance to End Homelessness (CAEH) lambasted the budget for not including any measures to ease the housing affordability crisis. “It’s clear that the federal government does not see the scale and urgency of these crises, and have offered no solutions,” said CAEH president and CEO Tim Richter. “For thousands of Canadians who will not be able to pay their rent this week, they will find no relief or meaningful support in this budget. Too many others will be projected unnecessarily into the life-threatening experience of homelessness.”
The only housing commitment in the budget is a $4 billion investment in an Urban, Rural and Northern Indigenous Housing Strategy. While the measure is very much needed to address the disproportionate number of homeless indigenous people, it is insufficient. It’s also being delivered by the Canada Housing and Mortgage Company, rather than National Indigenous Collaborative Housing Inc. This decision calls to mind antecedent colonial impositions that have always been disguised as charity.
The lack of urgency on the housing file makes sense when you realize that 38 percent of parliamentarians own real estate, meaning that they stand to profit from housing scarcity, according to disclosure records compiled by Davide Mastracci at Passage. Finance Minister Chrystia Freeland co-owns two rental properties on Aquinas Street in London, UK, with her husband, New York Times reporter Graham Bowley, from which they draw income. She also owns a residential property in Kyiv and farmland in her hometown of Peace River, Alberta.
Housing Minister Ahmed Hussen owns a rental property in Ottawa, from which he draws income. It’s entirely unsurprising that those who benefit from the housing affordability crisis fail to appreciate its urgency.
Echoing Biden, Chapter Three of the Canadian budget states that in order for companies to take full advantage of green energy subsidies, they will have to guarantee “that wages paid are at the prevailing level.” However, as we saw with the IRA, the devil is in the details. In the first six months since the US legislation passed, most of its $50 billion in investments have gone to companies in states that suppress unionization with “right-to-work” laws, which allow individual workers to opt out of unionization. The Canadian budget promises that the government will introduce anti-scab legislation by the end of the year, but this leaves a large window for employers to hire scabs.
Buried in Chapter Six of the budget, however, is a 3 percent across-the-board cut to the public sector to be implemented over four years for $7 billion in savings, followed by $2.4 billion in cuts annually. Crown corporations, which are owned by the state, are instructed to make “comparable spending reductions” beginning next year. Fred O’Rordian, head of tax policy at Ernst & Young, a firm notoriously amenable to reducing the size of government, described these measures as a “pretty blunt instrument,” which fails to “distinguish between programs that are already running efficiently and effectively and those that aren’t, and it doesn’t identify programs that are no longer necessary.”
The government insists that these cuts cannot come at the expense of “direct benefits and service delivery to Canadians” [emphasis added], meaning they’re going to come at the expense of those who deliver the benefits and services, whether through job cuts or wage freezes. Either way, an increasingly overworked public service will be forced to do the same job with fewer resources. As Chris Aylward, the head of the Public Service Alliance of Canada (PSAC), which represents federal public sector workers, puts it, “This budget screams austerity.”
More than one hundred thousand PSAC members have voted in favor of entering a legal strike position. If they do go on strike, there won’t yet be any legislation in place to prevent the government from hiring scabs. One might understand the sweeping public sector cuts outlined in the budget, in this context, as a warning to public sector employees that if they want to retain their jobs, they should limit their demands at the bargaining table.
All in all, the Liberals’ latest budget is in keeping with the party’s time-honored modus operandi: pay lip service to the needs of regular people and then pass legislation that keeps the boss class happy. The Liberals are nothing if not consistent.