No. 13 - A 2022 Budget Roundup

Chrystia Freeland wore black pumps and a blue outfit to release the 2022 budget. Those details are meaningless, though if you’ve been watching media coverage, you probably read about this ensemble somewhere. As the ancient tradition of shoe shopping, combined with the attention to details that do not matter, dominated media reports in the lead-up to the budget, I thought it might be useful to write about the lesser known parts of the budget – those parts that I think we need to keep our eyes on. 

Housing affordability

The budget assumes that Canadians are all dying to purchase houses. As such, there is very little in there to help renters. Here’s one promise that might help renters and homeowners alike: a whopping $500 cheque. For who? When? How? The Liberals will save that for a date where they need a boost in the polls. 

Budget 2022 proposes to provide $475 million in 2022-23 to provide a one-time $500 payment to those facing housing affordability challenges. The specifics and delivery method will be announced at a later date.

There is some money promised to organizations already doing work to mitigate homelessness (mitigate – no agency has the power to fight all the social conditions to actually stop homelessness. That is in the hands of the government!) But among their promises is “$18.1 million over three years, starting in 2022-23, to Infrastructure Canada to conduct research about what further measures could contribute to eliminating chronic homelessness.” As if we don’t have a pretty good idea already about what drives chronic homelessness.

There was also a lot of attention paid to foreign investment in Canada’s housing market, as the driver of the out-of-control housing market. The percentage of the housing market owned by international entities is exceedingly small: in Ontario, it’s just 3.3%. But it sounds good, so why not announce this and hope no one notices that you didn’t bring in any regulation related to the commodification of housing from domestic entities. 

But, they’re only banning foreign ownership of non-recreational, residential property. So cottages or vacation homes are exempt, as is commercial real estate. And, contrary to how many news reports presented this news when it was leaked the day before the budget, international students would not be exempt, except “in certain circumstances” and if they’re “on the path to permanent residency.” No further details. 

They also promised to stop home flipping. Except – the period of time you must own a property is 12 months, or if you can demonstrate life circumstances, like a new job or a divorce. But, as property values rise, what’s the big deal if you wait until month 13 before you flip the property? And, you can flip until your heart’s content in 2022 – the measure only takes effect in 2023.

Taxes

Small businesses only pay 9% in federal tax for their first $500,000 in taxable income. When their “level of capital employed in Canada reaches $15 million” they are bounced up to the regular corporate tax rate of 15%. 

Budget 2022 extends this reduced tax rate even further. Because this measure “can discourage some businesses from continuing to grow and create jobs” businesses don’t have to pay the 15% corporate tax rate before their level of capital reaches $50 million. 

Recall that even if you’re poor, even if you’re starving and can’t pay your rent, you still pay 15% in federal income tax. *inserted* - the basic amount of income that you can claim a tax rebate on (i.e. effectively pay no tax) is $13,229. Maybe if you declared yourself a business, you could reduce that tax burden.

And, while we’re talking taxes, look at the 10% of Canadians making $400,000 annually or more who are paying between 0-5% in income taxes. 

Resource extraction

Budget 2022 will give $3.8 billion over eight years to implement a “Critical Minerals Strategy.” This is a lot of money to potentially hand to the private sector to develop new resources projects. It’ll be important to pay attention to what this realizes. 

Canada has a data deficit – there are so many datapoints that we don’t collect at all, and it makes comparing Canada to other countries, or benchmarking our progress on anything, really difficult. During the pandemic, this lack of data has been endemic, and getting worse. There were only two mentions of new data collection projects, and only one that actually came with a budget to implement it: 

“79.2 million over five years on a cash basis, starting in 2022-23, for Natural Resources Canada to provide public access to integrated data sets to inform critical mineral exploration and development.”

Transportation and supply chains

The 2022 budget introduces this section by reminding Canadians about how supply chains were cut when BC flooded. There could be some very innovative work done on improving supply chain movement, specifically around creating more freight rail to also reduce the amount of trucks on the roads, but there is also a limit to how much Canada can control, when it doesn’t own any of the shipping and logistics companies that control Canada’s supply chain. 

$450 million over five years, starting in 2022-23, to support supply chain projects through the National Trade Corridors Fund, which will help ease the movement of goods across Canada’s transportation networks. This is in addition to the $4.2 billion that has been allocated to the fund since 2017. The Minister of Transport will rename the fund to reflect the government’s focus on supply chain.

The fund currently gives out grants to agencies and corporations that want to suggest improvements to Canada’s transportation corridors. Rather than figure out these issues within the branches of government, this massive fund gives money to groups to think of options themselves. I dunno – maybe Canada could just re-nationalize CP. 

Graduate student research commercialization

$47.8 million over five years, starting in 2023-24, and $20.1 million ongoing to Innovation, Science and Economic Development Canada to launch a new national lab-to-market platform to help graduate students and researchers take their work to market; 

How a graduate student, whose research is usually under the control or at least wing of a supervisor, would take their research “to market” seems particularly weird. I would guess this isn’t much more than a stunt – I don’t imagine most researchers will be able to access it.  

Saving the planet

Budget 2022 was pretty thin on planet-saving measures. Environmental groups have panned the massive cash transfer to the private sector that the Carbon Capture plans will result in ($4.1B over five years). 

But it’s the electric vehicle charging station promise that I find very interesting. Are they going to create a new Crown corporation to manage these stations? Electro Canada? Or will these be given to the private sector to build and manage? Electric Vehicle charging stations will displace gas stations all across Canada – if the government wants Canadians off gas by 2035, what’s the plan for a national EV charging network? 

Temporary workers

Budget 2022 is promising to create a “Trusted Employer Model that reduces red tape for repeat employers who meet the highest standards for working and living conditions, protections, and wages in high-demand fields” for employers who hire through the temporary foreign worker program. Details will be announced later (I would bet when the planting season really takes off and these workers are in the news) but anything that “reduces red tape” as it relates to workers should be seen with cynical eyes. 

War in Ukraine

Probably the most promoted part of this budget was the cash injection into defense spending. There is an increase of $8.8 billion, including $2.8 billion going to Ukraine alone in a mix of grants and loans. To put this into perspective, in Budget 2019, Canada committed $1.39 to Canada’s involvement in Syria. So, not too surprising and not all that more than any year we’ve decided to throw money into a war. 

But what is very different is that Ukrainians are being given “a special permanent residence stream” for Ukrainians who have family in Canada.  

Dental Care

This is seemingly the only thing that is holding this budget together: $5.3 billion over five years for dental care, $1.7 billion in ongoing funding. Of everything touted by the NDP in their deal to prop up the Liberals until 2025, this is one measure that I think we can point to and say it was delivered. But was it worth the climate and war parts of this budget? 

Interestingly, there is an explanation in the budget that “Canada’s strong economic recovery” is allowing the Canada Health Transfer to grow by $12 billion over the next five years. It’s a good reminder how much faith we place in economic growth in Canada to fund our essentials, rather than, I dunno, creating a sustainable tax system that can ensure that we have money to grow the CHT even if our economy takes a dive. 

Police and reconciliation?

While there was a mention of more money going to CBSA lumped in with many other agencies, this was the only explicit announcement of money going to law enforcement: 

Budget 2022 also proposes $5.1 million over five years, starting in 2022-23, to Public Safety Canada to ensure the Royal Canadian Mounted Police can support community-led responses to unmarked burial sites.

What?

Arts

Canada’s arts funding is a complete joke. As such, there were only two funding envelopes promised to artists: one cash injection of $50 million to Canada’s various arts granting agencies, and $12.1 for the National Arts Centre. I look forward to buttering my bread with nothing. 

And finally…

In writing this, I went back to Budget 2019 (the last pre-pandemic budget) and was reminded by how much the Liberals used Pharmacare. And yet, even with the NDP’s support, this budget doesn’t mention anything. You can re-read that here.