2024 Federal Budget is full of actions, short on results for the most marginalized

The 2024 Federal Budget is eliciting strong reactions – a telltale sign that it’s trying to do big things. It contains historic investments in housing and disability benefits, the likes of which we have not seen in some time, and descriptors such as bold and ambitious are absolutely warranted. Yet, somewhat paradoxically, the budget manages to under-deliver relative to the size of the housing and poverty challenges it purports to address, leaving many feeling rightfully disappointed.

At Maytree, our goal is to change social systems so they respect, protect, and fulfill human rights. There’s no doubt that this budget wants to change systems, and for that the government deserves credit. But in this flurry of action, the government has allowed its attention to drift away from its past commitments and continuing obligations to the most marginalized Canadians.

Let’s dive in.

The big picture

Since the pandemic, the federal government has rightly ignored the fiscal hawks and continued to run a modest deficit. It can do this because Canada’s debt-to-GDP ratio, though up since the 2010s, remains manageable and on a downward trend, and because the cost of servicing the debt remains relatively low. Budget 2024 sticks to this plan, with projected deficits essentially unchanged from November’s Fall Economic Statement. So how will all the new spending be funded?

A smart tax increase

This year the government is doing something unexpected and overdue: It’s raising taxes on the wealthy so it can fund new initiatives without adding to the deficit and stoking inflation. Increasing the capital gains inclusion rate from 50 per cent back up to 66 per cent for gains above $250,000 will address a deeply regressive aspect of the current tax system by causing more capital gains (profit from selling assets that have appreciated in value) to be counted toward one’s taxable income. This will generate $19.4 billion over five years from only 0.13 per cent of Canadians with average incomes of $1.4 million.

Another less talked about implication of this change is the significant revenue boost it will give to the provinces. Their personal income tax systems use the federal definition of taxable income, so provincial income tax will automatically apply to these same capital gains. Time will tell what the provinces choose to do with their portion of the windfall.

An unsung social policy victory

Meaningful tax increases are rare in today’s politics, and this one made much of the budget’s investments in housing and income security possible. As the defenders of low taxes decry the war on hard work, civil society would be wise to step out of its comfort zone and dive into this debate. Our redistributive tax system is the foundation of social policy in Canada, and we must be prepared to advocate for smart, progressive revenue tools just as we advocate for new tax benefits.

Canada’s Housing Plan

The budget dedicates 58 pages to largely reiterating the commitments made in Canada’s Housing Plan—the government’s new three-part housing strategy focused on building more homes, better supporting homeowners and renters, and helping people who face the greatest affordability challenges.

Unlike previous years, most of the details on the budget’s housing initiatives had been released in piecemeal announcements, and eventually in a fully separate document, in the lead-up to budget day.

This strategy makes sense given that housing affordability continues to rank among the top concerns for many people in Canada. And with an abundance of new housing-related initiatives ranging from loan programs for home construction to homelessness services, each part of the government’s housing plan deserved some undivided attention.

So, now that we have a plan aimed at every conceivable part of the housing continuum, what will it mean for people facing housing precarity? 

Supply continues to guide government policymaking

The overarching goal of the government’s plan is to “unlock” 3.87 million new homes by 2031. According to the budget, this means Canada needs a minimum of 2 million net new homes on top of those already in the works, with the responsibility for reaching this target shared by all orders of government. 

The federal government, like most governments in Canada, continues to be guided by the idea that the best way to make housing more affordable is to “increase supply—and quickly.”

And while more supply is an important part of the long-term solution, the reality is that the rush to build ignores the many people who need support now. With soaring rents, evictions reaching all-time highs in some areas of the country, and calls for a national plan to address the crisis of homeless encampments, we simply cannot wait for more supply to eventually affect housing prices, nor can we expect that the private sector will deliver affordable units at anywhere near the scale that is needed.

Thus, at its core, the Housing Plan is unbalanced. Too much of the new funding goes to boost market supply and not enough is earmarked to address the crisis of homelessness and precarious housing. 

That said, the Housing Plan includes many welcome changes that move the needle in the right direction.

Affordable rental housing supply gets a long overdue boost

The government has received its fair share of criticism for investing in housing programs that do not create units that would be affordable to the typical renter, let alone a lower-income household.

One such program is the Apartment Construction Loan Program, which still represents a big chunk of the federal housing portfolio in this budget. However, it’s good to see that its financing will soon be extended to housing projects for students and seniors.

The Housing Plan also includes initiatives that have long been advocated by many in the housing sector to improve the supply of affordable rental housing:

• Converting public lands to housing through a new Public Lands for Homes Plan, working with other partners and orders of government. Importantly, the government plans to retain ownership of federal lands, where possible, while leasing it to builders—an innovative approach to provide more affordable housing while also building the government’s balance sheet, as advocated by Maytree.
• A $1.5 billion fund, comprising loans and grants, for the acquisition of rental units by affordable housing providers to keep rents at affordable rates. The fund gets $477.2 million over the next five years and will be co-led and co-funded by the federal government and other “partners.”
• Launching a new Rapid Housing Stream to the tune of $976 million over five years under the Affordable Housing Fund. This stream will replace the highly successful, but highly expensive, Rapid Housing Initiative, to support the creation of deeply affordable housing.

Also worth noting is the government’s intention to restrict the purchase and acquisition of single-family homes by “very large” corporate investors. The details of this policy will come out following consultations in the coming months, but it is curious to see the government redirect its focus from the financialization of purpose-built rental housing—an area that has gotten much more press and was the subject of the National Housing Council’s first review panel.

While these initiatives have the potential to increase the desperately needed supply of affordable rental housing, they will need to be sustained and expanded in the future. It will also be important to keep track of how well they support people who are facing or are at risk of housing precarity. A global housing target is welcome, but the government’s housing plan will not be complete without a target for getting people housed and keeping them housed, including an explanation as to how new investments will reach that goal.

Welcome support for the protection of tenant rights

The budget provides a much needed acknowledgment of the fact that tenants require greater support to exercise their rights.

While many provinces already have laws that provide protections to tenants, the onus of understanding these rights and reporting unfair practices often falls on the tenant to pursue. In Ontario, for example, despite legislated limits on annual rent increases, media reports show that some property owners are consistently filing to raise rents above these guidelines. Recent data from Statistics Canada also shows that over a quarter of those who report being evicted in the past cite their landlord wanting to use the unit for themselves as the reason for the eviction—one that is difficult to prove and usually up to the tenant to track.  

In this regard, the budget makes a few promising commitments:

• $15 million over five years for a new Tenant Protection Fund for organizations that provide legal and informational services to tenants, as well as tenants’ rights advocacy organizations.
• A new Canadian Renters’ Bill of Rights, to be created with the provinces and territories, intended to protect renters from unfair practices, make leases simpler, and provide greater transparency over unit prices. Through this new declaration of rights, the government intends to address evictions for renovation purposes or “renovictions,” introduce a national standard lease agreement, and require property owners to disclose historical rents for their units.

While these are steps in the right direction, it’s time to address the elephants in the room. First, the responsibility to regulate rents and the landlord-tenant relationship falls under provincial jurisdiction, and even the promise of federal dollars may not coax them into compliance. Second, renters already have a whole set of housing rights under international law that are not adequately recognized or institutionalized in Canada, and these will only be further undermined if they are not included in a new Bill of Rights.

Nonetheless, it is generally positive to see the federal government recognize the need for stronger tenant support and to enshrine some existing protections in a national framework.

Homelessness initiatives get some space, but don’t address the urgency of the situation

The budget gives Reaching Home, which supports communities in providing various types of homelessness services, a top-up of $1.3 billion spread over four years. Yet the budget only mentions in passing the government’s previously stated goal to end chronic homelessness, and does not specify how the new investment in Reaching Home brings us closer to getting there.

Included in this funding is $250 million over two years for a new plan to address encampments and unsheltered homelessness. While more details on how this plan will work are needed, so far the government has said that provinces and territories will be required to cost-match federal investments, and that the funding will be used to train homelessness support workers, respond to the experiences of those affected by unsheltered homelessness, and renovate and build more shelters and transitional homes.

This commitment falls significantly short of the Federal Housing Advocate’s call to establish a National Encampments Response Plan by this August. However, we welcome the government’s language of responding to the unique needs of those affected by unsheltered homelessness—a soft acknowledgement that people living in encampments need support in accessing basic necessities to survive and keep safe, rather than forced evictions.

We are keen to see more details about this plan, including the principles it will be grounded in, the initiatives it will fund, and the conditions set on other governments to achieve these goals.

Where the Housing Plan can go next

Noticeably absent from the budget is any mention of the right to adequate housing—the recognition of which is supposed to be the government’s housing policy. 

The right to adequate housing matters from a policy perspective, since a human rights-based approach requires that government actions focus on improving housing outcomes for people in greatest need. It also requires the government to establish goals, priorities, and timelines related to homelessness, and provides for participatory processes for the public, including people with lived experience of housing precarity and homelessness. 

One way the government can help more people to realize this right is by increasing direct financial support to renters with low incomes. Since more supply will take time to implement, and people with the lowest incomes need support now, the government should explore ways to boost existing supports, like the Canada Housing Benefit, that provide more immediate and direct assistance in paying for current housing costs. Income supports have been proven to reduce housing affordability for lower-income renters, and the government has a wide range of tools that could be used to achieve this goal.

Canada Disability Benefit

If you haven’t been following the saga that is the Canada Disability Benefit (CDB), you’re probably wondering how a $1.4 billion annual benefit can be so frustrating for so many. The answer is a textbook case of overpromising and under-delivering thanks to insufficient coordination within government between the policy champions and the treasury.  

Way back in 2020 there was a Throne Speech that promised the new benefit would be “modelled after the Guaranteed Income Supplement,” which has a maximum benefit of over $1,000 a month and goes to more than 2 million seniors. A similar program for people with disabilities would be truly revolutionary—and very expensive. By contrast, this year’s budget proposes a CDB of just $200 a month that will go to only 600,000 people who can meet the disability definition used for the existing Disability Tax Credit. For a sense of scale, there were 371,000 Ontario Disability Support Program (ODSP) cases in 2021-22, and some cases have more than one beneficiary who has a disability.

A long road ahead

Fiscally speaking, it was always doubtful that the government would find the money for a benefit that would end disability poverty as we know it in a single year. Similar policy successes, such as the Canada Child Benefit, are the product of decades of relentless incremental improvements. This is the road ahead for the CDB.

The first task will be to avoid provincial clawbacks of social assistance, both to ensure the new money benefits its intended recipients and to reassure the federal government that further investment won’t end up being diverted into provincial and territorial coffers. In this regard, we’re pleased to see the government call on provinces and territories to exempt future CDB payments as income from other related benefits. Once the benefit flows to the people who need it, the hard work of expanding eligibility and increasing the benefit amount begins (pray that it’s at least indexed to inflation).

The CDB is a historic accomplishment and an important down payment. But the government should recognize its mistake and substantially increase the benefit amount immediately. Otherwise, when the money finally flows five years after the first announcement, it will not be the triumph the government hoped for, nor the benefit people with disabilities deserve.

Other highs and lows

The federal budget is ginormous and we can’t do it all justice. To cap things off, here are some quick highs and lows that we want to highlight.

High: National School Food Program

The federal government is finally coming to the table with $1 billion over five years to provide meals to 400,000 children each year. School food programs have manifold positive impacts for learning and social development, so this is money well spent. Implementation details are sparse, largely because every province will want to do its own thing. As long as the money is getting to kids, don’t expect the feds to impose too many parameters.

Low: Back to the old GST/HST Credit

One-time investments in each of the past two years injected billions in additional support for low-income families through the GST/HST credit. This was billed as a temporary “grocery rebate” recognizing the high cost of food. It’s a shame that even a modest enhancement didn’t stick around. Just because inflation has come down doesn’t mean the money isn’t still desperately needed, and a permanent enhancement, such as the proposed Groceries and Essential Benefit, could be a game changer.

High: Investment in free financial services

We were pleased to see $60 million over the next 5 years invested through Prosper Canada to expand free, community-delivered, financial services. The funds will help connect over a million people to an estimated $2 billion in income benefits they are eligible for but not yet receiving. More money well spent.

Low: Rights everywhere, except where it really matters

It is undeniably good that this budget is advancing the “right to repair” and the “right to disconnect.” But there are numerous human rights recognized in international law that have been binding on Canada for decades, yet go unacknowledged and unfulfilled. Governments should absolutely talk about rights, but it must be willing to take all these rights seriously.

High: Automatic enrolment in the Canada Learning Bond

The Canada Learning Bond (CLB) is a government contribution of up to $2,000 into a low-income child’s Registered Education Savings Plan (RESP), but a lot of parents don’t request the CLB or open an RESP for their child. With this change, the government will automatically open an RESP for an eligible child on their fourth birthday and start CLB payments. This is another good idea that took a long time to make happen.

Verdict

At a time of sluggish growth and stubborn deficits, the 2024 Federal Budget could have been forgettable. Instead, this is a bold budget that taps major new revenue tools and tries to take on today’s substantial social challenges.

Canada’s housing and income security systems have, with some notable exceptions, been neglected for some time. The federal government deserves credit for stepping up in this budget, often in areas thought of as provincial jurisdiction, and using a combination of money and moral suasion to raise our collective ambition. It’s bold and energizing, but it’s not a replacement for coming through for people living in homelessness and poverty.

As a plethora of new programs and benefits are fully designed and rolled out over the coming year, we call on the government to recommit to a rights-based approach that centres those in greatest need and offers real accountability for fulfilling their human rights.