Federal Finance Minister Chrystia Freeland tabled her 2024 budget Tuesday, laying out the government’s spending plans for the next five years, drawing reactions of frustration and doubt from some Albertans — and minor celebration from others.
Ottawa proposes $52.9 billion in new spending over five years, and will post a $40 billion deficit this fiscal year. It will also spend more on servicing its debt — $54.1 billion— than it will on health care this year.
An increase in capital gains taxes, housing assistance for students, and some new carbon rebates are some of the new commitments included in the plan.
“My initial thoughts about the federal budget are that they are overtaxing, overspending, over borrowing and over interfering in provincial affairs,” said Premier Danielle Smith at a press conference on Tuesday.
“In fact, if they just stop trying to be premiers and stop trying to dictate to the provinces what to do, they probably have enough money to take care of their areas of jurisdiction.”
Smith said she was most concerned to see the increase in interest rate payments the government is paying on its debt.
With interest rates at a 20-year high, Ottawa’s cost to borrow has spiked from $20.3 billion in 2020-21 to $54.1 billion in 2024-25.
“The premiers got together trying to get the federal government to spend something on something that would have helped all Canadians, which is them meeting their commitment on healthcare,” she said.
“And instead we’re seeing massive borrowing which is resulting in essentially when you pay interest charges, you’re just throwing that money away. That’s very frustrating.”
Not in line with Canadians’ priorities
Speaking at a separate press conference earlier on Tuesday, Finance Minister Nate Horner called the budget a missed opportunity, saying it will increase costs for Canadians amid an ongoing affordability crisis.
“Once again the federal government has poured gasoline on the inflation crises in Canada, not least by increasing the carbon tax on gasoline. Federal finances are deteriorating and there’s a complete lack of plan to return to balance,” said Horner.
Horner said the budget was not in line with Canadians’ priorities, including those of younger people, who he said are being saddled with ongoing deficits and increased levels of government debt.
The Alberta government was hoping the budget would provide support for industries impacted by “federal policies related to the clean economy,” long term flexible infrastructure funding, and a top up in funding to labour market development agreements, which support Canadians through employment insurance, funded skills training and employment assistance, said Horner.
“Not only did we not see really anything that we were after, we see all this excess spending.”
Horner added that instead of rampantly spending and reinforcing a debilitating deficit, the federal government should focus on encouraging investment in Canada’s economy, and cutting regulations across the board.
“It would be helpful if there was a legitimate path to balance,” he said. “A lot of what this budget shows is they are masking a lot of their spending intentions with the new tax increase.”
On a sole positive note, Horner said the $5 billion the government announced for its National Indigenous Loan Guarantee Program could mean good things for Alberta, especially if it’s spent on natural resources and energy investments.
The Canadian Association of Petroleum Producers (CAPP) said the inclusion of the oil and gas industry in the earmarked funding is a “significant advancement.”
“Given that Indigenous equity deals in Canada predominantly involve oil and gas projects, this program opens avenues for Indigenous communities to access capital, fostering economic reconciliation and self-determination,” said Lisa Baiton, president and CEO of CAPP, in a news release Tuesday.
Capital gains tax hike bad for investment, says industry
The budget’s tax hike on capital gains — the profit individuals make when assets like stocks and second properties are sold — was negatively received by industry groups.
The government is proposing an increase in the taxable portion of capital gains, up from the current 50 per cent to two thirds for annual capital gains over $250,000.
“Layering on new corporate taxes on top of regulatory uncertainty and costs undermines Canada’s attractiveness for investment on the global stage,” said Baiton.
Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce said increasing the tax on capital gains is a way for the government to profit off high company revenues without increasing the corporate tax rate.
The federal budget promises to add billions in new spending targeted at housing, young people and others, paid for by a capital gains tax increase on 40,000 of the richest Canadians.
Still, she said the hike could spook lenders.
“I understand the government needs to pay for some of its spending that’s announced but we also need to grow the economy, we also need to increase productivity and for that we need investment.
“So anything that provides a lower incentive for investment from a personal standpoint or from a corporate standpoint is not going to get us to where we need to go.”
Some small victories
The budget was a mixed bag from the small business perspective, said Andrew Sennyah, senior policy analyst, with the Canadian Federation of Independent Business (CFIB).
The budget’s proposed carbon tax rebates to small businesses are a win, said Sennyah, if not long overdue.
The budget proposes to return fuel charge proceeds from 2019-20 through 2023-24 to an estimated 600,000 businesses with 499 or fewer employees through a new refundable tax credit.
The government said this would deliver $2.5 billion directly to Canada’s small- and medium-sized businesses.
Help for students
For students, the federal budget has proposed to update the formula it uses to calculate financial need, in order to better reflect current housing costs and support renters.
It’s also promising to extend increased student grants and interest free loans, at an estimated total cost of $1.1 billion this year.
“There are a lot of important victories for students,” said Mateusz Salmassi, vice president external at the University of Calgary’s student union.