The promise and reality of gender budgeting

We need fiscal policies and budgetary processes to work together if we are going to close the gap for women living in Canada.
November 1, 2019

You can’t assume that government budgets affect men and women the same way—or other groups for that matter—since men and women generally occupy different social and economic positions. Unfortunately, until very recently, governments have done exactly that—developing policies and assigning funding to them in a gender-blind fashion.

Just asking how a policy could have a different impact on men and women, as Finance Canada now does, is important. It strips away the idea of budget neutrality. Gender budgeting also generates the evidence needed to inform policy and programs so that they have the best chance to deliver on their stated goals, strengthening public accountability and transparency in the process.

When economic policies are made based on this kind of gender-informed analysis, we have the opportunity to reduce the number of women experiencing violence and poverty. We have the chance to clear the way for women to have equal access to decent work and decent pay.

New gender budgeting legislation

Canada’s new gender budgeting legislation, passed in 2018, is an important milestone. It requires present and future governments to apply a gender and diversity lens to existing and proposed policy and program decisions. Although the government has carried out some gender-based analysis (known as GBA+ today) since the mid-1990s, it has only recently expanded the scope of its efforts to apply to all memoranda to cabinet, Treasury Board submissions, departmental plans and results reports, and now all budgetary and financial management policies. 

The 2017 and 2018 federal budgets included separate chapters on gender equality, for example. These summarized key challenges facing women, girls and gender diverse people and outlined related budgetary measures. A Gender Results Framework was introduced in the 2018 budget that set gender equality goals and related indicators to track progress.

This year’s federal budget presented the most detailed gender analysis to date. It included an update on Canada’s gender equality goals and a separate Gender Report that applied GBA+ to every budget measure. As a result of this analysis, federal departments were able to develop mitigation strategies to compensate and/or offset the negative impacts on women of 15% of the measures announced in the budget. In another 8% of cases, departments proactively took steps to reduce barriers to women’s equal participation in the program.

That said, gender-based budgeting, and GBA+ more broadly, remains a work in progress. Canada has struggled to implement GBA+ across all levels of government and was called out in two reports of the auditor general (in 2009 and 2015) for applying it “incompletely” and “inconsistently.” A 2016 study from a parliamentary committee on the status of women corroborated these findings.

More recently, results from a 2018 survey of public servants found that fewer than half of departments and agencies had a GBA+ plan in place, with most departments saying they lack the internal mechanisms to apply one. Many more officials are familiar with the concept of GBA+ but continue to struggle with implementation despite the rollout of new tools, training and support.

Action needed to strengthen gender budgeting processes...

The federal government has introduced some of the infrastructure needed to pursue gender equality. The question is whether these efforts will produce results.

On this score, as Helaina Gaspard and Emily Woolner from the Institute for Fiscal Studies and Democracy write, “the current parameters for GBA+ analysis are compelling at first glance but may be insufficient to have a real policy impact beyond a change in rhetoric.” The government’s Gender Results Framework remains “quite vague,” they add. Key objectives are identified alongside recent government initiatives, but there are no explicit connections between the two, no global plan for achieving desired outcomes.

Action is needed to strengthen Canada’s gender budgeting process—to ensure that the purpose and goals of GBA+ are defined in concrete terms, with clear metrics against which to evaluate progress. There also have to be enough resources in place to support the process or there is little chance of it eliminating the gender disparities identified.

… and to tackle gender bias in the tax system

The other side of this challenge, as Kathleen Lahey so insightfully describes in her research (see interview on page 36), is what’s needed to effectively deal with the profound gender bias already baked into the fiscal foundation of government, i.e., the expenditure policies, budgetary allocations and tax policies that impact women every day.

This includes tax measures designed in such a way that they disincentivize women’s paid work and keep women focused on unpaid work and care. The unequal division of caring labour already puts women at high risk of poverty. The inadequate supply of quality child care, home care and other supports, in addition to tax penalties for second earners, compounds these risks exponentially, especially for those women from marginalized groups.

The scale of these barriers is significant yet largely invisible. In the 2018-19 fiscal year, only 4.8% of the $27.6 billion in tax expenditures directed at supporting family caregiving (both paid and unpaid) helped women offset the costs of hiring paid care while they were in school or at work, according to research from Lahey.

The CCPA’s own research similarly reveals the skewed character of the tax system. Of the largest 42 tax expenditure programs, only eight (19%) delivered the greatest benefit to women. Women were the primary beneficiaries of the eligible dependent credit, receiving 78% of the $615 million the government spends per year. This is not surprising as the credit is designed to assist single parents, most of whom are women. The second most beneficial tax expenditure was the child care expense deduction, which allocated 74% of its $1.02 billion to women (again, no surprise, as this deduction must be claimed by the lower income partner).

By contrast, the employee stock option deduction provides 77% of its benefit to men and costs the federal government $755 million a year. (Of the 100 highest paid CEOs in Canada last year, only three were women). The partial exclusion of capital gains delivers 75% of its benefits to men, representing $6.6 billion in foregone revenue to Canadians—a huge benefit for the wealthy at great public expense.

Women and girls lose out twice from the cumulative impact of these policies. First when they lose access to essential public services due to insufficient revenues and withheld federal funding, and then when they are forced the fill the gaps with many hours of unpaid caring work, reducing their hours of paid employment in the process.

The promise and reality

In a world of concentrating wealth and privilege, refundable child care credits or even universal care strategies cannot on their own reduce deeply rooted structural barriers to economic gender equality. Our entire tax system needs to be revised, taking into account detailed distributional gender and intersectional impacts, if we are going to advance, rather than stymie, gender equality.

Which is why getting gender budgeting right is so important. The federal government has moved us in the right direction with its GBA+ legislation and new budgetary requirements. It seems less interested in correcting the imbalances in our tax system. We need fiscal policies and budgetary processes to work together if we are going to close the gap for women living in Canada.

Katherine Scott is Senior Economist at the CCPA's National Office.