Federal Budget Response 2019

Budget 2019 identifies important targets, but falls short of substantial change
March 19, 2019

OTTAWA—Budget 2019, tabled today in the House of Commons, takes steps forward on municipal infrastructure, support for seniors and capping the regressive stock option deduction, but missed the mark on delivering housing affordability and the significant cost-savings that can only be achieved through a universal, single-payer pharmacare system, according to experts from the Canadian Centre for Policy Alternatives.

“Budget 2019 identifies the right targets, but holds off on making necessary investments: climate change, unaffordable housing and the lack of wage raises are issues that can’t afford to wait,” says CCPA Senior Economist David Macdonald.

“Experience over the past four years has shown that progressive promises during an election year do not always translate into action, adequate funding and truly transformational federal policies.”

Budget 2019 received an unexpected infusion of new revenue since the fall update, largely due to an increase in personal income tax revenue. Much of the 2018-19 surprise revenue was spent on a $2.2 billion one-time transfer for city infrastructure through the gas tax.

“This budget could have done more to future proof the country against the social and economic uncertainties on the global horizon,” adds CCPA Senior Researcher Katherine Scott. “Budget 2019 tinkers in the margins, but doesn’t offer substantive relief for communities across the country who are being squeezed and are struggling to afford the basics of day-to-day life. This is a fiscal plan that’s more stopgaps than solutions.”

On pharmacare: “Today’s measures don’t fulfill the bold promises of national pharmacare including hundreds of dollars of savings per family in both insurance and out-of-pocket drug costs. Unfortunately, Canadians will have to wait at least another year, if not forever, to see the promises of pharmacare fulfilled,” says Macdonald.

On decent work and skills training: “Young workers have done their job: they’ve gone to school in record numbers and have the student debt to show for it due to ever higher tuition fees. Yet these same workers are now being asked to pay for their own training. Employers are missing in action in this plan, and despite making chronically low investments in on-the-job training, they’ll be the biggest beneficiaries by getting better trained workers,” says Scott.

On the stock option deduction: “Capping the stock option deduction is a welcome surprise in this budget to partially close one of the most regressive tax loopholes. However, it should be the start, and not the end, of addressing and capping regressive tax expenditures,” says Macdonald.

On housing: “The hard truth is that there are no shortcuts to dealing with high house prices, which would have to fall or at least stagnate for a decade to become more affordable. Taking out new loans from CMHC or retirement savings doesn’t make housing more affordable–it just allows for another source of debt financing that must be repaid. It is time to meet young people where they are, in the rental market, by providing them with purpose-built rental and stronger renter rules until incomes to catch up with house prices,” says Macdonald.

On climate: Budget 2019 continues the federal government’s modest efforts to move forward on greening the economy. Subsidies for electric vehicles and investments in electric vehicle infrastructure will help shift Canada’s auto market toward cleaner alternatives, but the budget fails to take other necessary steps toward a cleaner economy, such as eliminating subsidies for the fossil fuel industry. The budget also makes welcome investments in the communities affected by Canada’s shift away from coal power. “This ‘just transition’ plan for the coal sector establishes an important precedent for future efforts to phase out fossil fuel production, especially in the oil and gas sectors,” adds Scott.

What’s missing: Funding for a national child care plan is missing, even as parents continue to pay incredibly high fees in many cities across the country. Also missing are large investments to replace fossil fuel infrastructure with renewable alternatives and a commitment to a comprehensive review of Canada’s tax system beyond the stock option deduction.


For more information or to arrange interviews contact: Alyssa O’Dell, CCPA Media and Public Relations Officer, at 613-563-1341 x 307, cell 343-998-7575 or media@policyalternatives.ca.