Carney's Spring Economic Update mainly helps the rich
The wealth gap is only going to grow worse.
While the capital-B “Budget” only comes once a year, Canadian Finance Ministers have the leeway to introduce additional budgetary bills in-between their annual budgets. The exact length and depth of these seasonal “economic updates” vary based on the particulars of the day, and while they don’t involve all the pomp and circumstance of a proper annual budget, they are still significant packages of legislation, and votes on these bills are a matter of confidence.
In terms of this Spring Economic Update, the Carney Liberals have presented a plan primarily focused on neoliberal economics and the attraction of private capital, at the expense of the affordability concerns that are heavily plaguing Canadians right now. If you’re one of the people struggling to keep afloat in this economy, don’t expect anything significant to help you here.
Mind you, there are some measures in this legislation that are good, and likely attract universal support. Streamlining access to the disability tax credit and adding more funding for safe sport initiatives are both nice policies, even if they’re just trimming around the edges of systemic social issues. And promises to fight financial crimes, while vague, would obviously be welcome if they materialize; a ban on cryptocurrency ATMs will cut down on a massive conduit for money laundering.
But there are also less savoury things snuck into this omnibus package, which would likely be controversial if they were presented upfront as their own separate legislation. Without specifying details or limits, the Carney Liberals plan to allow police officers to search through Canada Post letter mail and packages, a second swing at the decried “snooping provisions” of the failed Bill C-2.
And just as vague are their stated plans to “modernise [sic]” airport governance, and delegate air travel complaint resolution to a private organization. Finance Minister François-Philippe Champagne is openly floating the possibility of privatizing core national assets, increasing my anxieties about the Carney Liberal austerity plan.
Going into the core economic policies of this legislative package, we see that the balance lies firmly on making Canada an attractive investment opportunity rather than making Canada an affordable place to live. Much touted is the new Canada Strong Fund, an investment vehicle being endowed with CAD$25 billion in public funds, plus additional private capital invested by individual Canadians in some sort of advantaged structure.
Canada’s adoption of a sovereign wealth fund is confusing, as one is typically used to capture tax revenue from natural resources during a fiscal surplus, and then diversify the money into a variety of international assets according to an apolitical strategy. Instead, Canada will be investing borrowed money while in a fiscal deficit, refusing to impose any sort of windfall tax on oil and gas companies in the wake of their profiteering off the Iran War, and the money will go towards major domestic projects designated by politicians, raising questions of the suitability of investments picked.
Further, the idea that the government will back the fund’s returns implies that “major” projects which can’t obtain financing due to their lack of returns will be subsidized by taxpayer dollars. In addition, most Canadians are nowhere close to filling up their TFSA, RRSP, FHSA and other tax-advantaged investment vehicles, if they can even save money at all. Sliding another one of these kinds of subsidized or advantaged accounts on top of the pile is merely a new way to widen the wealth gap, the rich growing their hoard of gold while the poor live paycheque-to-paycheque.
The Spring Economic Update does have one pro-worker set of policies, if you’re considering the skilled trades. Billions of dollars are being allocated to help ensure more apprentices can actually pass their Red Seal certifications, including a CAD$10,000 lump sum, an additional CAD$400/week income top-up in training, and a CAD$5,000 bonus for those who obtain their Red Seal. While these will address some of the issues that cause people to fail out of the skilled trades, there are other issues that aren’t tied to money, like rampant sexual harassment pushing women away.
And this only helps the segment of people currently trying to break into the trades, without doing much else in the short-term for the working class to address the affordability question. If you’re already a certified journeyperson, this does nothing to increase your wages—indeed, additional competition from others in your trade may lower them—and if you’re not in the trades at all this does nothing to immediately address food or housing costs.
The one token measure that the average Canadian does get in this regard will be a small cut to Canada Pension Plan contributions; according to the Spring Economic Update, an individual earning CAD$70,000/year will now pay CAD$133 less in annual CPP contributions. For such a small reduction in individual payments, I can’t see this slash to the CPP as a positive; taking money away from your own retirement savings is like robbing Peter to pay Paul, and multiplied over an entire generation of Canadians doing the same, there will be a great societal cost.
In conclusion, this legislative package offers very little for the average Canadian. If you’re wealthy and have money to spend, this will help you pull even further ahead, but the rest of us will be left behind as the consequence. It does not appear that the Carney Liberals will take the affordability issue seriously any time soon.