Budget 2022: Minister Freeland’s four pillars

April 08, 2022
Minister Freeland unveils Budget 2022.
Finance Minister Chrystia Freeland has tabled her second pandemic budget, totalling $56 billion in new expenditures.
 

Yesterday, Finance Minister Chrystia Freeland released her second budget, A Plan to Grow Our Economy and Make Life More Affordable. Freeland is also deputy prime minister, though she wasn’t sporting that hat at the time. This big-spending budget announced a total of $56 billion in new expenditures. The biggest ticket items were defence, housing, climate change and health. Unfortunately, there was little new money for seniors and veterans navigating a potentially rocky post-pandemic future.

“We are absolutely determined that our debt-to-GDP ratio must continue to decline. Our pandemic deficits are and must continue to be reduced. The extraordinary debts we incurred to keep Canadians safe and solvent must be paid down. This is our fiscal anchor — a line we shall not cross,” Freeland said in her speech.

Freeland began her speech in the House of Commons by thanking Canadians for bending but not breaking over the course of the pandemic. She reported that in 2020, our economy contracted by 17 per cent — the deepest recession since the 1930s and that three million Canadians lost their jobs. But since then, “our economy has recovered 112 per cent of the jobs that were lost during those awful first months, compared to just 90 per cent in the United States.”

While that bodes well for a potentially rosy future with the Canadian economy returning to a pre-pandemic level of activity in the fourth quarter of 2021, she added two caveats that could derail future good times: a potential new wave of COVID in China that could disrupt supply chains; and the Russian invasion of Ukraine, causing more worldwide inflation.

She noted that business and consumer confidence have both recently fallen since that conflict began. The OECD estimates global growth falling by more than one per cent in the first year and global inflation by at least 2.5 per cent, she said.

“While inflation in Canada is more moderate than in some other countries, total consumer price inflation reached 5.7 per cent year over year in February — the highest level since August 1991,” she wrote in the budget foreword before announcing some better news. “As a commodity producer with limited economic ties to Russia, Canada is more insulated from the crisis than other countries.”

Freeland is of Ukrainian heritage and has long been an enemy of Russian President Vladimir Putin for her activism against him. The Ukrainian invasion personally disgusts her, and she described it today variously as illegal, barbaric, unprovoked and unjustified.


Commitments to seniors

This budget leans heavily on previous commitments — some dating back to 2015 and 2017 — regarding seniors’ benefits. Budget 2022 says that since 2015 the government has been “implementing a 10 per cent increase to the maximum GIS benefit for single seniors, and reversing the announced increase to the eligibility for OAS and GIS back to age 65 from 67.” The OAS and GIS are both indexed to inflation and forecasted to provide $68.2 billion in support to seniors in 2022-23, growing to $87.2 billion in 2026-27. As of February 2022, there were close to 6.9 million OAS recipients, including 2.2 million GIS recipients, plus about 72,000 allowance recipients. In other words, they’ll get just the inflation bump.

Budget 2022 also proposes $20 million over two years, beginning in 2022-23, for an expanded New Horizons for Seniors Program to support more projects that improve the quality of life for seniors and help them continue to fully participate in their communities.

On federal retirees’ pensions, there is also a promise to explore improving public sector pension plan governance, with the Public Sector Pension Investment Board (PSPIB), gaining two seats to be filled by federal public sector bargaining agents.

“This is an interesting development,” says Anthony Pizzino, CEO of Federal Retirees. “Pensioners want to know where their seat is to ensure their interests are represented in managing funding for the pensions they’ve worked for.”
 

Health

In terms of health, the budget proposes $5.3 billion to provide dental care for Canadians with family incomes of less than $90,000 annually, starting in 2022 with those younger than 12 and expanding to those 18 and younger as well as seniors and persons living with a disability in 2023, with full implementation by 2025. This program would require no co-pays for those with family incomes of less than $70,000.

“We’re very keen to learn more about national dental care,” notes Pizzino. “Many of our members have the Pensioners Dental Services Plan or PDSP, and while the plan provides dental coverage — a rarity for retirees — the cost can be steep for some federal retirees. This could make dental care more accessible for some of our members and older adults, and certainly for some of their families, and that’s important.”

The budget promises an increase of nearly five per cent to the Canada Health Transfer, including a top-up of $2 billion to reduce surgical backlogs. There’s also money for improving dementia and brain health research, including a centre for study.

The budget proposes the creation of an expert panel to study the idea of an Aging at Home Benefit, an item that was included in the mandate letter for Seniors Minister Kamal Khera, but with no funding attached and a vague promise of details over the coming months.

For women, Budget 2022 proposes to provide $539.3 million over five years, starting in 2022-23, to Women and Gender Equality Canada to enable provinces and territories to supplement and enhance services and supports within their jurisdictions, to prevent gender-based violence and support survivors.

A new initiative is a proposed $25 million for a two-year Menstrual Equity Fund to provide menstrual products to those in need.

There are also tax changes for allowing medical expenses for surrogacy for in vitro fertilization and allowing fees paid to fertility clinics to be eligible for tax credits for 2022.

Rural communities will get money to encourage doctors to move or stay there by offering student loan relief for doctors who practise there.

There was no mention of the promised Safe Long-Term Care Act, a Liberal election promise and an issue on which seniors advocates, including Federal Retirees, have been calling for federal leadership since before the pandemic brought havoc and tragedy to long-term care.

On pharmacare, a commitment of $35 million was made to advance its implementation in Prince Edward Island. The government says it’s continuing to work toward a universal national pharmacare program and that it will table and aim to pass a Canada Pharmacare bill in 2023. 
 

Defence

Budget 2022 proposes to provide $6.1 billion over five years, starting in 2022-23, for defence. There’s also $1.3 billion in remaining amortization and $1.4 billion ongoing to meet defence priorities such as continental defences, commitments to our allies and investments in equipment and technology. That roughly $8 billion will bring Canada close to 1.5 per cent of GDP on defence spending. That’s less than the two per cent NATO allies are asked to spend, but it’s a higher percentage than Canada has allotted since 1995.

This year Canada already announced more than $1.2 billion in direct contributions in support of Ukraine and its people, in addition to an offer of up to $1.6 billion in loan support for the Ukrainian government. The budget proposes to provide an additional $500 million in 2022-23 to provide further military aid to Ukraine.

Freeland also announced $1.028 billion for other international assistance for health and pandemic efforts globally.

Budget 2022 proposes to provide $100.5 million over six years, starting immediately to strengthen leadership in the Canadian Armed Forces, modernize the military justice system and bring into force the Declaration of Victims Rights as set out in the National Defence Act. It also proposes to undertake engagement and consultation on culture change; and enhance restorative services, including dispute resolution and coaching services.

The budget also proposes to provide $144.3 million over five years, starting in 2022-23, and $31.6 million ongoing to expand the Canadian Armed Forces’ health services and physical fitness programs to be more responsive to women and gender-diverse military personnel.

“This investment, almost all of which is new, is a notable win,” says Pizzino. “Military health services have an eventual direct impact on veteran well-being, and it’s our hope that this will start to turn the tide for military and veteran women, who have historically been under-served and under-represented.”

When it comes to veterans, the budget flags $140 million over two years to address the persistent backlog on disability claims at Veterans Affairs, but it appears to be funding that was already announced on Feb. 23, 2022, by Veterans Affairs and Associate Defence Minister Lawrence MacAulay.
 

Housing

Veterans are visible in the budget in another major line item of this budget — housing. The caveat? Most of the funding tagged for housing won’t kick in until next year.

The largest feature on housing is $4 billion over five years, starting in 2022-23, to the Canada Mortgage and Housing Corporation to launch a new Housing Accelerator Fund.

For homeless veterans, Budget 2022 proposes to provide $62.2 million over three years, beginning in 2024-25, to launch a new Veteran Homelessness Program that will provide services and rent supplements in partnership with community organizations. Freeland’s budget document notes this targeted program investment follows on a $45 million pilot program that was part of the 2021 federal budget.

Seniors get a mention on housing, too, with the multigenerational home renovation tax credit, which provides up to $7,500 in support for building a secondary suite for a senior or an adult with a disability. Starting in 2023, the credit allows families to claim 15 per cent of construction costs up to $50,000. That includes making a home more disabled-friendly, widening doorways, building wheelchair ramps, building bedrooms on the first floor and installing non-slip flooring.

Broader Budget 2022 measures include $1.5 billion over two years, starting in 2022-23, to extend the Rapid Housing Initiative. This new funding is expected to create at least 6,000 new affordable housing units, with at least 25 per cent of funding going toward women-focused housing projects.

The budget proposes to introduce new rules to ensure profits from flipping properties are taxed fully and fairly. Specifically, any person who sells a property they have held for fewer than 12 months would be flipping properties and would be subject to full taxation on their profits as business income.

The budget includes the creation of a tax-free savings account for first-time buyers of up to $40,000 starting next year. And this year, first-time buyers can get a tax credit of $10,000, offering a maximum of up to $1,500 off their taxes.
 

Climate change

The budget included many big programs to help Canada fight climate change. Freeland’s main push here was for adopting low-carbon technology in the public and the energy sectors.

The budget promised $6.8 billion over the next five years for initiatives for the public, business and government to adopt electric vehicles and green their carbon outputs.

There’s $1.7 billion over five years to extend the incentives for the zero-emission vehicles program until March 2025 to help more Canadians get behind the wheel of zero-emission vehicles (ZEVs). There’s also $547.5 million over four years to launch a new purchase incentive program for medium- and heavy-duty ZEVs to help businesses upgrade their fleets. The budget also commits funds to build a national network of electric vehicle charging stations.

In terms of the impacts of wildfires, there’s $346.1 million to train 1,000 firefighters and provide them with new equipment and $169.9 million to create a new wildfire satellite monitoring system.

There’s also $3.39 billion for the energy sector, most of which is targeted toward carbon capture and storage technologies. A proposed refundable tax credit is expected to cost $2.6 billion over five years starting in 2022-23, with an annual cost of about $1.5 billion in 2026-27. Going forward, it is expected that the measure will continue to cost approximately $1.5 billion annually until 2030.

There’s also $121 million for supporting small modular nuclear reactors that could be used in resource extraction.

Another major spend was to spur growth and innovation. The budget claims the government has a plan to tackle what Freeland called “the Achilles heel of the Canadian economy.”

Budget 2022 announced the Canada Growth Fund, capitalized at $15 billion over five years. Its goal is to combat a low rate of private business investment in research, development and the uptake of new technologies. There’s also a new federal innovation and investment agency, with a proposed budget of $1 billion over five years starting in 2022-23. Budget 2022 also proposes to build on previous investments and provide $96.6 million over five years, starting in 2022-23, and $22.9 million ongoing to promote intellectual property in Canada.

Also looking to the market future, the budget includes a large investment in promoting Canada’s critical minerals, used for such things as cell phones and electric batteries. China has been trying to corner this market, and Canada has fallen behind in exploiting its own resources in this sector. Budget 2022 proposes $3.8 billion in support over eight years, on a cash basis, starting in 2022-23. There’s up to $1.5 billion over seven years, starting in 2023-24, for infrastructure investments that would support the development of the critical minerals supply chains, with a focus on priority deposits. Additionally, there’s money for Natural Resources Canada  to share data and loosen rules for investors in the sector and for negotiating with Indigenous groups.

There’s even $40 million over the next five years for strengthening the tiny Canadian semiconductor industry.
 

Other promises

For Indigenous Canadians, over five years, there’s $4.573 billion toward reconciliation of past harms, and $5.521 billion toward helping their communities live better.

To combat labour shortages, the budget offers $3.993 billion over five years for helping immigrants and asylum seekers integrate into Canada, and also work on foreign credential recognition.

There’s also money in this budget for some minority groups. There’s about $50 million for supporting Black students and researchers, $3.7 million for mental health support for black federal public servants and $50 million over two years to help Black Communities and their community organizations. For Muslim Canadians, there’s $4 million to help the National Archives add records about them. And for Jewish Canadians, there’s a promise to announce funding for the Jewish Community Centre of Greater Vancouver.

The budget also seeks to help our potato producers who got hit with a U.S. boycott of their product last year. There’s $16 million for the Atlantic Canada Opportunities Agency to assist the P.E.I. potato sector and supply chain, in light of the potato wart, and another $12 million to help detect it in future.

And finally, in short form, for those who enjoy the outdoors, there’s $55 million to maintain and enhance the Trans Canada Trail. There’s a promise to develop a buy-back program for assault weapons. And to end on a high note, a promise to engage with the Canadian cannabis industry — a global leader in supply.