What does this budget mean for you?
This week Finance Minister and Deputy Prime Minister Chrystia Freeland tabled the federal government’s budget 2021 titled….” A Recovery Plan for Jobs, Growth, and Resilience.”
Minister Freeland is the first woman to present the federal government’s budget in Canadian history.
This budget introduces a host of new spending measures as part of Canada’s continued response against the COVID-19 pandemic and longer-term recovery. This Liberal budget commits up to $104.1 billion in new spending over the next three years, broken down into five areas: job creation, small businesses and growth, women and early learning and childcare, climate action and a green economy, and young Canadians.
Federal budget 2021 signals without reservation that the federal government is willing to spend whatever it takes to ensure Canadians come out of the pandemic as close to whole as possible. As well this budget makes crystal clear which policies the federal government feel should be prioritized as we head towards a potential fall election.
The number one priority in this budget is the federal government’s commitment to establish a Canada-wide early learning and childcare system. The Liberal Party of Canada has promised such a program since 1993 and this budget makes that one step closer to reality. The government’s goal is to bring regulated childcare costs down to $10 per day on average over the next five years. To support this proposal, budget 2021 aims to invest up to $30 billion over the next five years, and $8.3 billion ongoing for early learn and childcare and indigenous early learning.
The budget that was tabled this week was 724 pages, one of the longest in Canadian history. However, the budget length is consistent with the vast number of investments and other measures outlined in the document. As l indicated, this budget is broken down into five key themes and l will give you a snapshot of these areas and some notable changes that l believe you should be aware of……
- Creating one million jobs by the end of the year – as promised in last fall’s Speech from the Throne.
- Budget 2021 proposes to introduce the new Canada Recovery Hiring Program for eligible employers that continue to experience qualifying declines in revenues relative to before the pandemic. The proposed subsidy would offset a portion of the extra cost’s employers take on as they reopen, either by increasing wages or hours worded, or by hiring more staff.
- This budget proposed to extend the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy, and Lockdown Support until September 25, 2021.
Small Businesses and Growth
- This budget proposes to improve the Canada Small Business Financing Program to increase annual financing by $560 million, supporting approximately 2,900 additional small businesses, alongside other enhancements that will increase the eligibility to this financing and permit lending against intellectual property and start-up assets and expenses.
- The government is committing to engage with key stakeholders to lower the average overall costs of interchange fees for merchants, ensure that small business benefit from pricing that is similar to large business, and protect existing rewards points for Canadian consumers.
- Budget 2021 proposes to provide $500 million over two years, starting in 2021-2022, to the regional development agencies for community infrastructure. These projects will stimulate local economies, create jobs, and improve the quality of life for Canadians from coast to coast.
Women and Early Learning and Child Care
- This government is proposing to provide up to $146.9 million over four years, starting in 2021 -22, to strengthen the Women Entrepreneurship Strategy.
- Advancing a National Action Plan to end gender-based violence. This budget will invest $601.3 million over five years, starting in 2021-22, to advance this plan.
- Responding to the tragedy of mission and murdered indigenous women and girls, this budget proposes to invest an additional $2.2 billion over five years, beginning in 2021-22 and $160 million ongoing, to help build a safer, stronger, and more inclusive society.
Climate Action and a Green Economy
- This budget will propose to provide $4.4 billion on a cash basis to help homeowners complete deep home retrofits through interest-free loans worth up to $40,000. The program would be available by summer 2021 and support retrofits for up to 200,00 households.
- Providing $2.3 billion over five years to Environment and Climate Change Canada, Parks Canada, and the department of fisheries and oceans to conserve up to one million square kilometers more land and inland waters.
- Budget 2021 proposes to provide $5 billion over seven years to the Net Zero Accelerator.
- This budget has proposed to introduce an investment tax credit for capital invested in carbon capture, utilization, and storage projects, beginning in 2022, with the goal of reducing emissions by at least 15 megatons of CO2 annually.
- A proposal to change the delivery of Climate Action Incentive payments from a refundable credit claimed annually on personal income tax returns to quarterly payments made through the benefit system starting in 2022. This will deliver Canadians Climate Action Incentive payments on a more regular basis.
Young Canadians/ Our Youth
- The Liberal budget proposes to invest $4.1 billion to help make postsecondary education more affordable, and to provide direct support to students with the greatest need.
- Providing $150 million over two years, starting in 2021-22, to support indigenous students. This support would help offset lost income that many indigenous students rely on to pay for tuition, books. Housing, and other living expenses.
- Injecting $708 million over five years starting in 2021-22, to create at least 85,000 work-integrated learning placements that provide on the job learning and provide business with support to develop talent and grow.
- This budget will also provide $100 million over three years for innovative mental health interventions for populations disproportionately impacted by COVID-19, including health care workers, front-line workers, youth, seniors, indigenous peoples, and racialized and black Canadians.
Other Notable Investments
- This budget proposes to introduce a tax on the sales, for personal use, of luxury cars and personal aircraft with a retail sales price over $100,000, and boats, for personal use, over $250,000.
- Increase the tobacco excise duty by $4 per carton of 200 cigarettes, along with corresponding increases to the excise duty rates for other tobacco products.
- Implementing a 1% tax on the value of non-resident, non-Canadian owned residential real estate that is considered to be vacant or underused, effective January 1, 2022.
I have tried to give you a snapshot of what was presented this week by the Minister of Finance and how it will affect you and your family…. but my takeaway from this 2021 budget is spend, spend, spend. With the emphasis that it’s a political budget and the platform for the next federal election.