Following its alliance with the NDP, the Liberal government had free rein to make this budget a tool in the fight against poverty and global warming. Finance Minister Chrystia Freeland, however, has delivered a budget plan that offers half measures and gives pride of place to developers and private investors.
Posted at 1:00 p.m.
The federal deficit continues to shrink this year. From 328 billion dollars in 2020-2021, it drops to 114 billion in 2021-2022 and will be less than 10 billion by 2026-2027. As for the federal debt, it continues to fall to reach 48% of GDP in 2021-2022. Canada is the least indebted G7 country relative to the size of its economy. Ottawa therefore had the most enviable leeway to set in motion the most pressing projects.
In two key areas, namely housing and the environment, the government is choosing instead to support the private sector in the hope that it will solve the problems that it has nevertheless helped to create.
Tenants left to fend for themselves
Housing prices have continued to rise in recent years to the detriment of low- and middle-income households. Between the end of 2017 and the end of 2021, rents increased by 13.4% while inflation increased by just over 7% during the same period. Measures were therefore expected to support tenants, but they are largely left to their own devices. It must be said that Canada has never recovered from the cuts that social housing construction programs suffered in the 1990s and that, until now, the National Housing Strategy has mainly favored the construction of rental housing which are not accessible to the poorest. So-called affordable housing is disappearing faster than new ones and the announced addition of 100,000 housing units over five years will only meet a fraction of current needs, estimated at nearly three times.
Contradictory measures of access to property
The government is also announcing measures to support access to home ownership, including the establishment of a tax-free savings account for the purchase of a first home (CELIAPP) and the enhancement of the tax for the purchase of a house. Since they support demand, these measures are nevertheless likely to fuel the rise in house prices.
In return, the government is taking a number of steps to curb speculation, including taxing profits during real estate flips, a more than welcome measure in a boiling market. It also prevents for two years purchases by foreign investors, who nevertheless represent a minority of buyers. It would have been wiser to target all investors who – through their practices – have been driving property prices upwards for two decades. For example, the down payment required for property purchases could easily have been increased when it comes to investor transactions. In short, in terms of housing, private developers appear to be the big winners of the approach adopted in this budget.
The private sector to the rescue of the environment?
Carelessness is also present in terms of the environment. Ottawa is betting on electric vehicles, to which half a billion will be devoted from 2022-2023, and is funding the exploitation of critical minerals with billions. The government is also supporting, through the Canada Infrastructure Bank, various industries, often highly polluting themselves, to develop technologies that are supposed to help Canada achieve carbon neutrality, although the evidence remains. usually to do. In addition to an act of faith in the private sector, this is a missed opportunity to assume real leadership in the fight against global warming.
The government had a responsibility, in light of the warnings issued by the Intergovernmental Panel on Climate Change a few days earlier, to give Canada the means to transform the way we produce, consume, transport and dwelling. After the announcement of the government’s support for the Bay du Nord oil project, it is clear that it avoids the questioning that is necessary.
Despite its alliance with the NDP, the Liberal budget fails to adopt a realistic strategy to reduce overheating in real estate and structural measures to fight against global warming. By the same token, it risks fueling public cynicism about parliamentary institutions.