The biggest announcement in Budget 2021 is $30 billion over 5 years for childcare, with an annual spend of $8.3 billion after that. The plan is very similar to the federal NDP’s proposals in the 2015 and 2019 elections, reducing the average cost of child care by half by 2022, and lowering the cost to $10/day by 2026. The proposal is good, talking about a workforce plan, focus on not-for-profit spaces, and additional data to provide accountability. In order to get the funding from the Federal government, provinces and territories will need to sign a bilateral agreement, with no details on what those agreements might look like. The budget commits to enshrining the principles of a Canada-wide child care system in law, following consultations in Fall 2021.
The budget also adds $100 billion in federal spending over the next three years, using key labour market indicators to justify the need for stimulus spending. Debt-to-GDP will increase to just over 50% in 2021-22, falling over the next few years as COVID and stimulus measures are pulled back. Even though the federal government will have added more than $500 billion in debt between the start of the pandemic and the end of 2021-2022, the overall cost of carrying federal public debt is smaller now than it was prior to COVID-19. This is partly because interest rates have fallen, and partly because the federal government has shifted more of its debt into longer lower cost loans.
While there are some bright spots in this budget, overall, it fails to acknowledge the scale of the issues we are facing, and the depth of inequality that exists. There are no new actions toward national pharmacare, and precious little on the crisis in long-term care. Climate solutions are mostly left to the market, with targeted tax and investment incentives. New training programs are underfunded, and completely employer driven – meaning they will likely fund training that employers were already intending to pay for, rather than providing new training based on worker’s needs. The promised extension of sick leave through Employment Insurance is delayed until the summer of 2022, and COVID-19 benefits for workers that don’t qualify for EI have been cut from $500 per week to $300 per week. There is no attempt to reverse decades of tax cuts for the rich, only a token tax on luxury vehicles.
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While this budget definitely moves the needle on child care, on the rest of the care economy, it falls short. There is nothing new on pharmacare, simply a repeat of previous statements that the federal government will “proceed with their announced plan to provide $500 million of ongoing funding for high-cost drugs for rare diseases.”
On long-term care, the budget allocates $3 billion over 5 years (starting in 2022-23) to support provinces and territories in applying and enforcing their own standards. There is no mention of getting profit out of long-term care or improving labour standards and wages in the sector, and no guarantee that this money won’t be used to subsidize for-profit facilities.
While the federal budget proposal on childcare did commit to increasing workforce training and growing space (no specific number of spots), it did not commit to any action on improving working conditions. The federal budget plan for childcare focused on reducing parent fees. In child care, workers’ pay often subsidizes parents’ fees. The child care sector is already significantly understaffed. CUPE members are reporting their inability to get any time off because there are no casuals or substitutes available. Wages, benefits, and pensions need to be increased to recruit new workers and retain current workers.
For personal support workers, the only help is $27.6 million over three years to my65+, a Group Tax-Free Savings Account (TFSA) offered by the Service Employees International Union Healthcare (SEIU). What is more urgently needed is an increase in wages, paid sick leave, and access to affordable public training opportunities to recruit desperately needed workers in this sector.
Persons with Disabilities
The budget allocates $11.9 million over three years for consultations on the design of a new disability benefit to help persons with disabilities overcome barriers to achieve full economic and social participation. The announcement is welcome news given that people with disabilities are about twice as likely to live in poverty compared to people without a disability, but the three-year (or more) delay is a concern.
In the meantime, the federal government will expand the eligibility criteria for the disability tax credit, as well as criteria for determining what is life-sustaining therapy. This is expected to help an additional 45,000 Canadians receive benefits through this program.
In addition to its commitment for a new disability benefit, the federal government should also commit to the following:
- Consult with the provinces and territories to address clawbacks to the Canada Pension Plan Disability Benefit (CPP-D) and increase benefits to account for COVID-related costs. Canadians who receive either private or provincial disability income supports may be eligible to receive the CPP-D but payments may be clawed-back.
- Consult with the provinces and territories to address clawbacks to the Registered Disability Savings Plan (RDSP). Parents and other caregivers can contribute to an RDSP to help ensure the financial security of a person with a disability.
- Increase the maximum amount of the Canada Child Disability Benefit (CCDB) and ensure it is not clawed-back by provincial and territorial governments and extend the benefit to more moderate-income families. The CCDB is a tax-free monthly payment made to families who care for a child under age 18 with a severe and prolonged disability.
Most COVID-19 measures are being wound down over the next few months. The Canada Recovery Benefit (CRB) has been extended an additional 12 weeks – the first four weeks will still be paid at $500 per week, but the last 8 weeks have been cut to $300 per week. This will affect any workers that don’t qualify for EI. The Canada Recovery Caregiving Benefit has only been extended for an additional 4 weeks at $500 per week. The government maintains the flexibility for additional extension until November20, 2021 should it be needed.
The Canada Emergency Wage Subsidy (CEWS) will be phased out by reducing the subsidy rate in each 4-week period between July and September, and by ending support for furloughed workers at the end of August. The end of support for laid-off workers will affect a large number of workers in the airline sector who are still furloughed because air travel will be significantly reduced for the foreseeable future.
Starting in June, publicly listed corporations will have to repay any wage subsidy that they receive if their 5 highest paid executives earn more in 2021 than they did in 2019. This measure is not retroactive and does not cover dividends or share buyback schemes. However, it is an acknowledgement that the initial measure lacked serious accountability mechanisms.
The Canada Hiring Program will replace CEWS and be available between June 6 and November 20, 2021. While both programs are active, a company can choose one or the other, depending which is more advantageous for them. To qualify, employers must have had a payroll account with CRA on March 15, 2020 and a revenue reduction that would qualify them for wage subsidy, or more than 10% after the wage subsidy periods have expired. This program does not cover furloughed employees. The amount available is 50% of the incremental renumeration paid to eligible employees between June 6, 2021 and November 20, 2021, and it is expected to cost $595 million for the six-month period. The CEWS accountability measure does not apply to the new hiring program, so some large publicly traded companies may simply switch to this program so that they can continue to receive subsidies and boost CEO compensation.
For now, EI will keep the 420-hour pan-Canadian entrance requirement, and 5 extra weeks have been temporarily added in 13 high unemployment regions. The promise to extend the duration of EI sick leave from 15 weeks to 26 weeks has been pushed back to the summer of 2022, leaving long COVID patients who have exhausted other benefits without support this summer.
The two recovery benefits, Canada Recovery Benefit and Canada Recovery Childcare Benefit will be covered by general revenues, an amount of $26.3B. The EI account will still be more than $20B in deficit out to 2025-26. Premiums are forecast to stay at 1.58 until 2023 and go up slightly to 1.63 in 2023-24.
The federal government has long acknowledged weaknesses in the EI system that became even more obvious during the pandemic. Once again, they are promising consultations on future reforms to EI.
Other Measures for Workers
Federal Minimum Wage
The budget promises to implement a federal minimum wage of $15 per hour for workers in federally regulated industries, ensuring that a higher provincial minimum wage would prevail. They promise to index it to inflation. There is no timing provided for when this would come into effect, but it would help 26,000 workers who currently earn less than $15 per hour.
Canada Workers Benefit
This budget increases the number of people who will receive the Canada Workers Benefit by extending the phase-out threshold for individuals and families. Now, individuals will still receive some amount of the CWB up to an income of $32,244, and families up to $42,197. In a household with more than one earner, the second earner can exclude $14,000 of their income in calculating the qualifying level. This is meant to helps address disincentives for re-entering the workforce for second earners in the household – mostly women. The amount of the benefit is not increased - the maximum amount is still quite low at only $1,395 for individuals, and $2,403 for single parents or couples.
The budget commits to introducing new legislation for gig workers when current consultations are complete.
Wage Earner Protection Program
The budget promises to remove the current 6.82% deduction from the wage earner protection program. This deduction was meant to represent the deductions at source that a worker would normally see on their pay. Since there was a cap to overall payments, it only applied to workers whose payments were already below the cap. This will simplify the system and get more money to lower waged workers when they use this program. The average benefit is expected to be about $300 per worker.
This budget funds several work placement programs for young workers:
- Student Work Placement Program gets $239.8 million to increase the wage subsidy for employers up to 75%, to a maximum of $7,500 per student, with expanded access for employers;
- Youth Employment and Skills Strategy received $109.3 million to support an additional 7,000 job placements;
- Canada Summer Jobs gets $371.8 million, which will support 75,000 job placements in the summer of 2022; and
- MITACS receives the majority of the funding available, with $708 million over five years for work-integrated learning placements.
The Canada Student Loans Program (CSLP) is being renamed the Canada Student Financial Assistance Program. Provinces and territories that do not participate in the CSLP will continue to receive equivalent compensation. Budget 2021 continue to suspend interest accrual on student loans for one more year and increases the threshold to qualify for repayment assistance to $40,000 for borrowers who live alone. For students in larger households, the qualification threshold will match cut-off for Canada Student Grants. These new income cut-offs will be indexed to inflation.
Student grants will remain doubled until the end of July 2023 – this means that the maximum grant for a full-time student is $6,000 and the maximum grant for a part-time student is $3,600. The budget also introduces an extension of disability supports to students with persistent or prolonged but not permanent disabilities.
For Indigenous students, there was Indigenous $150.6 million over two years for the Post-Secondary Student Support Program (PSSSP) and the Inuit and Métis Nation PSE Strategies. During COVID $26.4 million was delivered through the PSSSP and the Inuit and MN PSE Strategies to support Indigenous Post-Secondary Institutions.
There was also some new funding for research. The budget added $500 million over four years for Canada Foundation for Innovation (CFI) to support bio-science infrastructure needs of universities and research hospitals and $250 million for a new biomedical research fund through the tri-council granting agencies. There was also $8 million over two years to support the transformation of Aurora College to a polytechnic university, and $121.3 million over three years to Canadian Heritage to make high-quality, minority-language PSE available across Canada. There was no operational support for universities and colleges, despite the devastating cuts at Laurentian University. While support for students is welcome, it does not contribute to the stability of the post-secondary sector.
New Targeted Training Programs
Rather than expanding existing training programs, or boosting the support provided through existing labour market development agreements with the provinces, the federal government has announced five new training programs in Budget 2021. Each of the programs are targeted at different issues, but all are entirely employer driven.
The Sectoral Workforce Solutions Program is $960 million to work with sector associations and employers to design training and help employers retain diverse workforce. The program has a 40% target for underrepresented groups, which includes women, persons with disabilities, and Indigenous people. This program is meant to help 90,000 workers, but the employer focus means that it will likely simply be a subsidy for training that employers were going to need to do anyway.
In order to encourage employers to hire more first year apprentices, the federal government is offering a $5,000 subsidy for first year construction and manufacturing Red Seal trades. The subsidy will be doubled to $10,000 for women, racialized people, and persons with disabilities, helping to diversify these fields.
A new Skills for Success program will offer $298 million for employer and community-based literacy, numeracy, and digital skills programs. This is not nearly enough to replace cuts to funding for community-based literacy programs.
The new Community Workforce program consists of a relatively small amount of $55 million for targeted interventions in 25 communities. The money is allocated to develop special training for “high potential growth” employers in these communities. There are two streams that employers can apply for – a national stream with priorities such as just transition, and a local stream focused on regional priorities.
The final program, Transitioning to New Jobs, will provide Innovation, Science and Economic Development Canada (ISED), with $250 million for industry led, 3rd party delivered approaches to upskill and redeploy workers. While using the language of helping workers transition, this initiative sounds a lot like the privatization of training.
Overall, the training programs are small compared to the scale of what is required, and heavily focused on employer needs rather than workers’ needs. Given the scale of labour market shifts that are currently happening because of COVID-19, climate change and automation, this is very worrying. Canada already spends very little on adult education and training compared to our OECD counterparts, and this budget will make very little change in that trend.
Mental Health and Drug Policy
There is some money for federal government agencies to develop national standards for mental health. Stakeholders have called on the federal government to enshrine these national standards with an amended Canada Health Act, or by the introduction of a new Mental Health Parity Act. The new Act would affirm that mental health is valued equally to physical health; it would also ensure that governments, communities, organizations, and workplaces treat mental and physical health equitably through policies, programs, and services. The new Act would also recognize mental health as a human right.
There is also $100 million over three years for mental health interventions to help groups who have been most impacted by COVID-19 – such as health care workers, frontline workers, and seniors.
The budget promises targeted funding of $597.6 million over 3 years, starting in 2021-22, for a distinctions-based mental health and wellness strategy with First Nations, Inuit, and the Métis Nation. The strategy will renew funding for the Indian Residential Schools Health Supports Program and Crisis Line, which provide healing supports for survivors of childhood trauma and residential schools. It will also stabilize and expand community-based supports and capacity, increase substance use treatment and prevention, and support workforce development.
During a drug poisoning crisis on a scale that Canada has never experienced before, there is nothing in this budget that ensures a safer supply of drugs or offers decriminalization - both of which would prevent deaths. The budget does allocate $116 million over two years to the Substance Use and Addictions Program (SUAP) to support harm reduction, treatment and preventative initiatives for opioid use. SUAP is generally well respected and the additional money for harm reduction programs is greatly needed. Unfortunately, the budget also expands Drug Treatment Courts with $40.4 million over 5 years beginning in 2021-2022. Drug Treatment Courts are not an effective or evidence-supported method of drug treatment. Studies show that DTCs have a 6%-36% success rate, and people who “fail” end up with longer sentences.
There is no new funding for public transit, simply a repeat of the already announced $14.9 billion public transit fund. The Gas Tax Fund for municipal infrastructure has been renamed to the Canada Community Building Fund, but there is no new funding, just references to the already announced top up. There is a mention of $1 billion over six year for the Universal Broadband Fund, but again, this is not new funding.
There is some welcome new funding for social and cultural infrastructure, such as $1 billion over 3 years for tourism, arts, and culture. There are also a number of supports announced for specific institutions, such as the National Arts Centre in Ottawa and the National Film Board.
CUPE agrees that infrastructure is one of the most important and effective investments the government can make. The value generated for the people who live, work, and play here is immense. However, when this value is captured by, or given away to, the private, for-profit sector, Canadians lose out on that value.
Many of the infrastructure commitments in the Liberal government’s 2021 budget will rely heavily on private sector investment to meet their stated goals. This is a problem, as we have seen over the past five years with the Canada Infrastructure Bank. The government – and Canadians – would be better served by making direct public investments in these initiatives.
Furthermore, virtually every monetary commitment is diluted by an inexplicably long-time horizon. We have seen federal funding with multi-year disbursement windows start moving slowly, proceed to glacial, and finally be pushed even further into the future in subsequent budgets. This practice has not yet been successful in crowding the private investment dollars that initial announcements predicted. We would prefer to see firm annual commitments.
Overall, there are many good initiatives in this budget – for example, it is nice to see a dedicated stream for natural infrastructure, but $200 million (over 3 years!) is hardly enough. While the best initiatives are underfunded, the largest and potentially most transformative ones are reliant on third-party, private sector actors. There is significant room for improvement.
The budget pledged to cut Canada’s emissions by 36% below 2005 levels by 2030, a target that was boosted to 40-45% later in the week (on Earth Day). This goal was not matched in scale by new funding. Much of the money announced was to incentivize private investment in green solutions, or in enhancing our ability to measure reductions – such as certifying green buildings. The budget also invests in carbon capture, storage, and use technology and research, sending the wrong message about what it will take to transition our economy to lower emissions.
Budget 2021 proposes to provide $5 billion over seven years, starting in 2021-22, to the Net Zero Accelerator. Building on the previously announced funding for the Net Zero Accelerator announced in the strengthened climate plan at the end of 2020, the total government funding available to businesses is $8 billion. The money will support projects that will help reduce domestic greenhouse gas emissions across the Canadian economy. The Net Zero Accelerator is part of the Strategic Innovation Fund (SIF), that falls under Innovation, Science and Economic Development Canada (ISED). This fund has been used to give money to businesses, such as 3M and Sanofi Pharmaceuticals, with minimal strings attached. The budget says that the fund will be exploring ways to expand its toolkit, CUPE will be monitoring to ensure this does not lead to more privatization under the guise of greenwashing.
There is a small targeted corporate income tax (CIT) rate reduction for zero emission manufacturers, that is expected to cost less than $10 million in 2022-23. For manufacturers that qualify, the CIT will be cut in half – 7.5% rather than 15% for the general rate, and 4.5% rather than 9% for the small business rate. Manufacturers of renewable energy equipment, ZEV, Batteries, fuel cells, charging systems, and biofuels will qualify if 10% of their gross revenue comes from these activities. The federal government will be consulting on the exact design of the program, and plan to phase it out starting in 2029.
For green infrastructure, there is a new federal green bond fund with a target investment of $5 billion will fund green infrastructure, technological innovations, and nature conservation. There is also $1 billion over 5 years to help draw in private sector investment for large-scale clean technology projects. For northern communities, there is $40.4 million for much needed hydroelectricity and grid improvements. To encourage private home retrofits, the budget allocates $4.4 billion to Canada Mortgage and Housing Corporation (CMHC). This will be used to provide up to $40K low interest loans to private homeowners for deep home retrofits for energy conservation. Finally, there is $1.4 billion over 12 years allocated to Infrastructure Canada for the Disaster Mitigation and Adaptation Fund, with 10% reserved for Indigenous communities.
Business tax measures
Two small boutique tax changes may get some attention – a luxury tax on luxury cars and aircraft over $100,000 and boats over $250,000; and a 1% tax on vacant property owned by non-resident non-Canadian persons. The luxury tax is expected to raise $140 million per year, and the vacant property tax $200 million per year. These changes are very limited, and mostly symbolic.
We did not expect to see much in terms of a support package for the airline sector in this budget, but there was some targeted assistance for new infrastructure requirements in airports. Budget 2021 allocated $82.5 million in 2021-22 to Transport Canada to support Canadian airports in COVID-19 testing infrastructure, and $105.3 over 5 years to facilitate the “Known Traveller Digital Identity” pilot project to facilitate touchless air travel. The Canadian Air Transport Security Authority (CATSA) received $6.7 million for sanitation equipment, and $271 million for screening.
Budget 2021 also announced that the federal government intend to introduce legislation that would extend equal renumeration protection to more employees in the air transportation sector (i.e., contract flipping wage protections).
Library Workers’ Sector
Budget 2021 allocated $14.9 million over four years, beginning in 2021-22, to support the preservation of Indigenous heritage through Library and Archives Canada so that Indigenous women, girls, and LGBTQ2+ people have access to their cultures and languages.
In its 2020 Fall Economic Statement, the federal government eliminated all funding to the Centre for Equitable Library Access (CELA) and the National Network for Equitable Library Access (NNELS). These two organizations provide services to Canadians with print disabilities. CELA had received $3 million and the NNELS had received $1 million in annual funding from the federal government. That funding will be eliminated by the 2024-25 fiscal year.
The funding cuts could not have come at a worse time. The COVID-19 pandemic has resulted in increased isolation for the estimated 3 million Canadians with a print disability. Advocates have been successful in forcing the federal government to restore $1 million in funding for the 2021-22 fiscal year only. But going forward, the elimination of $4 million in annual funding remains. CUPE and other stakeholder organizations are calling on the federal government to restore full funding to these two groups. So far, the funding has not been restored.