Budget 2023 includes convoy response money, $1B to bolster Phoenix pay system
NAC, museums also to receive influx of cash
The federal budget tabled Tuesday focuses on some big-picture concerns, from the rising cost of living, to health care, to shifting the economy away from fossil fuels.
The 266-page document also describes how the government wants to get spending "back to a pre-pandemic path" after a few years of adding programs and growing the federal public service.
In the coming years, federal departments, agencies and Crown Corporations — with about 40 per cent of their employees in the capital region — will be looking at reducing spending by about three per cent.
For those living in the capital region, here are four budget highlights:
Convoy reimbursement
The federal budget includes $91 million this year for Public Safety Canada to reimburse cities and the RCMP for their security operations during the truck convoy protest in the winter of 2022.
The Ottawa Police Service has been expecting Public Safety Canada to refund it $10.9 million for protests and events last year under the program for "extraordinary policing" in the nation's capital.
The City of Ottawa has calculated its own convoy-related costs at $2.3 million, a figure that hits $7 million when the municipality accounts for lost transit and parking revenue, and the impacts on downtown business organizations.
Phoenix pay system
The federal budget sets aside a whopping $517 million this year and $521 million next year so Public Services and Procurement Canada can keep existing staff at the Miramichi payment centre to process pay transactions for public servants, and deal with the ongoing backlog.
That figure is far higher than past amounts allocated for the failed Phoenix system that launched in 2016, in part because the federal public service has added tens of thousands of employees in the past few years which means a higher volume of transactions.
Back in September 2021, the software company Ceridian was chosen to design the next generation of the federal payment system.
Budget 2023 includes $52 million for Shared Services Canada to work on that replacement for Phoenix, as well as for Treasury Board to deal with human resources and pay matters.
NAC, museums
An extra $13 million this fiscal year and $15 million next year will again go toward the National Arts Centre so that it's financially sustainable.
The performing arts Crown Corporation had a budget of $92 million last year, and it has received federal help in recent years because its ticket sales fell off significantly when stages closed during the pandemic.
Meanwhile, six national museums will share $23 million this year and $30 million next year to help with "immediate building maintenance."
That includes the National Gallery of Canada, the Canadian Museum of History, the Canadian Museum of Nature and the Canadian Museum of Science and Technology.
Transit and infrastructure
The budget contains no new details on money to pay for transit infrastructure for municipalities, but promises information by this fall on the big-ticket permanent fund worth $3 billion a year that's to start in 2026-27, which was announced a couple years ago.
The budget makes no mention of funding to help municipalities operate their transit systems. The City of Ottawa has relied on pandemic-era funding for OC Transpo, and its current budget is based on receiving an extra $39 million from upper levels of government.
The doors are closing for any new allocations under the Investing in Canada Infrastructure Program, which has been helping pay for various projects from new buses to upgrading sewage treatment plants and recreation centres.
The budget document says "the government is actively reviewing Canada's continued infrastructure needs" for future funding.
From groceries to booze, payday loans to
Government spending plans outlines measures aimed at combating inflation
With inflation still near its highest level in decades, the federal budget unveiled in Ottawa Tuesday offered a lot of talk about making life more affordable for Canadians — but few details about how it's all going to work.
One of the biggest items leaked prior to the budget's release is something the government is calling a "grocery rebate" meant to mitigate the cost of grocery prices that are still rising at an annual rate of more than 10 per cent.
It's an extended version of the existing GST rebate cheque program, which gives cash payouts to refund GST payments incurred by low-income Canadians.
The government says the rejigged program will put an extra $467 into the pockets of the average family with two kids, and $234 for a single person. Government estimates suggest they think roughly 11 million people will qualify for the program, which is to be doled out via a quarterly cheque or direct deposit.
Strictly speaking, the government isn't requiring that the money be spent on groceries. But the program's branding suggests Ottawa hopes it will deliver $2.5 billion in relief where many Canadians need it most — in the checkout aisle.
That's good news for people like Krystle Kisman, a single mother from Burlington, Ont., for whom putting food on the table has been a major source of stress of late.
"I remember I used to spend $200 every two weeks and I would get double what I'm getting now," she told CBC News this week. "It's tough. A lot of times I use my child tax credit towards our food for the month."
The grocery program is targeted at people like Kisman, who have had to face impossible choices between paying rent and paying for food.
There's very little else in the budget in the way of direct payments to Canadians to blunt the impact of inflation. But the document is also sprinkled with programs and policy ideas aimed at helping consumers keep a little more of the money they already have.
In recent weeks, the beer and alcohol industry has been sounding the alarm about a looming hike to the federal tax on beer, wine and spirits. The so-called excise tax is pegged to inflation, which means it was on track to increase by more than six per cent this weekend — a jump that would have taken the toll to 73 cents on a litre of wine and more than 37 cents for a litre of beer.
Those excise fees are paid by brewers, wine and spirit makers, but the costs filter down for consumers as they add to the cost of doing business, and pushing up retail prices.
The government announced in the budget that it will slash that increase to two per cent for this year, well below the inflation rate.
The budget also aims to rein in some of the more exorbitant costs that some Canadians pay to borrow money. While rates on conventional personal and business loans from major lenders tend to hover between the low single digits for a mortgage to slightly over 10 per cent for other forms of unsecured debt, that's not true for all types of loans.
That's why the budget targets what the government calls "predatory lending" by changing loopholes that currently allow some lenders to charge rates as high as 47 per cent per year.
The government says it's going to amend the Criminal Code to cap those rates at 35 per cent, in line with existing regulations already on the books in Quebec.
Payday loans are currently exempt from that legislation due to various loopholes. Those loans are typically for small amounts of up to $1,500 and only for terms of up to two months — but despite their short term, their costs are far higher than other loans, as annualized rates can sometimes approach 400 per cent.
The government says it plans to tighten and eliminate some of those loopholes by requiring payday lenders to charge no more than $14 for every $100 borrowed. And says it will consult with the provinces on additional revisions on how to further regulate the payday-lending industry.
Credit card fee reductions
The government also laid out new rules for another source of frustration for small businesses and consumers: credit card fees.
Every time a customer swipes a credit card to pay for a purchase, the vendor pays what's known as an interchange fee to the credit card company processing the transaction.
In Canada, such fees on some cards can amount to up to three per cent of the purchase price — far higher than they are in jurisdictions where they are capped.
While the budget stops short of imposing such a cap, the government did say it has struck a deal with the major credit companies that will see interchange fees reduced by about 27 per cent for about 90 per cent of the businesses that accept credit cards.
Dan Kelly, president of the Canadian Federation of Independent Business, said the lowering of fees is a good start, but more is needed. "A 27 per cent reduction in small business merchant fees is significant, but more details are needed to determine how many small businesses will benefit from this plan," he said.
Government estimates suggest the new fee structure will save small businesses $200 million a year, savings that should theoretically filter down to consumers since a court ruling last fall established that merchants are allowed to pass those fees on to consumers directly now.
Credit card fees aren't the only hidden fee facing scrutiny. Although it offers few details, the government says it wants to crack down on what it calls "junk fees" that get tacked on to goods and services.
The government says it wants to work with the provinces and various regulators to examine things like cellphone roaming charges, ticket fees and excessive baggage fees — just a few examples of the sort of nickel-and-dime fees that annoy consumers.
Travel fees set to increase
But even as the government talks tough about getting rid of hidden fees, it's actually increasing one that Canadians pay every time they get on a flight.
The Air Travel Security Charge is one of many fees that flyers pay when they buy a plane ticket. The money goes to funding and improving vital airport services like passenger screening and baggage handling.
First implemented in 2002 after the Sept. 11 attacks, the fees have not increased since 2010, when they jumped up by more than 52 per cent to their current level.
The budget has earmarked an extra $1.8 billion to help fix the travel chaos that Canadians have experienced at airports of late, but it will come at a hefty cost for consumers. The Air Travel Security Charge is set to increase by almost 33 per cent next year.
That will bring the added fee on a one-way ticket within Canada to $9.94, on a flight to the U.S. to $16.89, and on a trip overseas to $34.42.
Economist Armine Yalnizyan said that, coming from a government claiming to be focused on helping Canadians deal with high inflation, the budget offered little of substance.
"Something is better than nothing," she said of the grocery rebate program, "but affordability got the short shrift in this budget."
She said tackling junk fees plays well among voters who can afford to do things like go on vacation and buy concert tickets, but they don't help with the pain of necessities like food, shelter, and gas.
"They are catering to people who are inconvenienced by problems at the airport and the Taylor Swift crowd and saying 'we are going to deal with Ticketmaster maybe' but inconvenience is different than going hungry."
"You don't want to worry about inconvenience at a time of basic affordability."
Budget 2023 offers billions for dental care, plus spending cuts and tax hikes to tame deficit
The Liberals' fiscal plan offers no new major housing
commitments
Finance Minister Chrystia Freeland tabled a federal budget Tuesday projecting a deficit about $10 billion higher than initially forecast — an increase driven by a worsening economy and new spending on initiatives like a national dental care program.
Freeland's fiscal plan projects the deficit will be $40.1 billion in 2023-24 — up from the $30.6 billion she said it would be just last fall.
Freeland's relatively brief 250-page budget is being pitched as a focused plan to address inflation — there will another one-time GST rebate for low-income Canadians — and to position the economy for the future through multi-billion-dollar tax credits to stimulate the clean energy sector.
A faltering economy means Ottawa will collect $5.7 billion less in revenue this fiscal year than it initially projected — a development that blows a big hole in the federal treasury.
To keep a lid on mounting deficits, Freeland is proposing a series of tax increases on the rich and large corporations and cuts to government spending.
All told, Freeland is planning to slash some $15.4 billion in spending over the next five years through "targeted reductions," including an effort to curb the use of "professional services" and management consultants and a reduction in travel expenses.
She's promising to levy a two per cent tax on stock buybacks, to hike the "alternative minimum tax" to make the wealthier pay more and to tax dividends received by financial institutions — three initiatives that are projected to raise $11.6 billion over the next five years.
The budget is also increasing the air travellers security charge by 32.85 per cent to address the sorry state of Canada's airports. That works out to a $34.82 levy on international flights.
Air passengers will be on the hook for some of the costs associated with improving security and baggage screening.
Highlights from the federal budget:
- A one-time "grocery rebate," which will provide eligible families with up to $467. Single people with no kids could get up to $234 more.
- A 40 per cent increase to Canada Student Grants.
- A $13-billion plan to expand dental care to families earning less than $90,000 a year.
- A new 15 per cent refundable tax credit for clean electricity investments.
- A refundable 30 per cent tax credit for investments in clean tech manufacturing.
- Cuts to government spending.
- A tax on share buybacks.
In a speech to MPs after tabling her budget, Freeland said the document maintains Canada's "proud tradition of fiscal responsibility."
With economic growth expected to flatline this year (Ottawa is projecting a 0.3 per cent increase in GDP), Freeland said Ottawa needs to follow an economically prudent path while spending more in some areas.
"By exercising fiscal restraint, we are ensuring that we can continue to invest in Canadians and in the Canadian economy for years to come," she said.
Kevin Page, the former parliamentary budget officer, told CBC News the government clearly has grown "more pessimistic" about Canada's economic outlook since the fall mini-budget.
"We're looking at flat real growth in 2023. The unemployment rate is going to tick up. You really can't make the case that they've loosened the purse strings all that much in this budget," he said, adding the planned spending increases are relatively "modest."
Missing from Freeland's document is any major new initiative to help ease the housing supply crunch — a problem that has only gotten worse as the country absorbs hundreds of thousands of new arrivals who are all looking for a place to live.
Canada added more than a million people last year. Housing starts haven't kept pace.
"In terms of a housing affordability, we're in real trouble," said Armine Yalnizyan, an economist and Atkinson Fellow on the Future of Workers.
"I think it's remarkable that this government is importing over a million people, temporarily and permanently, and every one of those people needs a place to live and we're not accelerating our building of affordable rental housing."
The government's long-promised home savings account will roll out this year, offering tax savings for first-time buyers.
The "housing accelerator fund," an incentive announced in last year's budget to encourage municipalities to make home construction easier, will also unleash roughly $925 million in funding this year to spur construction.
The Financial Consumer Agency of Canada is also drafting some sort of "code of conduct" to protect Canadians with mortgages who are facing "exceptional circumstances." The budget offered no details.
Roughly 70 per cent of the $43 billion in net new spending announced in this year's budget is earmarked for health and dental care over the next six years.
The budget sets aside full funding for its dental care plan, fulfilling the government's commitment to the NDP.
The program will continue to roll out this year, extending dental services to lower income Canadians who don't already have access to a dentist.
The program's price tag is steep: $13 billion over five years.
When the program is fully operational in 2025, nine million uninsured Canadians with an annual family income of less than $90,000 will qualify for coverage. There will be no co-pays for those with a family income under $70,000.
The program will be run by Health Canada with a "third-party benefits administrator" charged with actually managing program benefits — a structure that essentially leaves the provinces and territories out of the mix.
"No Canadian ever again will need to choose between taking care of their teeth and paying their bills at the end of the month," Freeland said. "There are significant and necessary investments."
WATCH: Budget projects $40B deficit this year - higher than forecast:
The federal government's 2023 budget includes billions of dollars in spending for health and dental care, clean tech investment and a 'grocery rebate' to help some Canadians struggling with the rising prices of necessities.
While the Liberal Party promised a dedicated mental health transfer in the 2021 federal election campaign, Freeland's budget offers little to help Canadians grappling with depression, anxiety, post-traumatic stress disorder and other ailments.
The largest budget line-item on this file is $158.4 million over three years to launch the 988 suicide prevention phone hotline.
To fight the opioid crisis, the budget is providing $359.2 million over five years to support a "renewed Canadian Drugs and Substance Strategy." That includes new money to help prevent substance abuse and streamline the establishment of new "supervised consumption sites."
The government signed a landmark deal with the premiers earlier this year — a major fiscal commitment that will substantially boost the Canada Health Transfer in the coming years.
But the budget doesn't really address how provinces and territories will maintain current health-care staffing levels and recruit new workers for a system on the ropes after years of pandemic-related disruptions.
"It's a very striking gap in the document. We're talking about agricultural workers, truck drivers, critical mineral miners, but there's nothing in here about the people who provide us with critical services — doctors and nurses," said Yalnizyan.
"That's a problem because our system is crumbling as we speak. They gave the provinces so much money but the feds didn't ring-fence a single penny to ensure it doesn't get wasted on agency nursing and for-profit care."
A senior government official, speaking on background to reporters during a budget briefing, said Ottawa needs a robust response to U.S. President Joe Biden's recent Inflation Reduction Act — a bill that, despite its name, is really a climate change plan that promises hundreds of billions of dollars in funding to stimulate clean energy development and a greener manufacturing sector.
If the federal government doesn't step up with a plan of its own, Canada will be left behind, the official said.
To that end, the federal government is introducing an investment tax credit for clean energy and clean tech to build a "prosperous low-carbon future."
The budget offers a 15 per cent refundable tax credit for eligible investments in "non-emitting electricity generation systems" like wind, concentrated solar, hydro, wave, tidal and nuclear projects. That'll cost the federal treasury $6.3 billion over four years.
To stimulate clean technology manufacturing, the budget proposes a refundable tax credit equal to 30 per cent of the cost of investments in new machinery and equipment. That credit will cost an expected $4.5 billion over five years.
That will be useful for companies looking to extract, process or recycle critical minerals like lithium, cobalt, nickel, graphite, copper and rare earth elements — products that are in hot demand around the world as electric vehicle (EV) manufacturing ramps up dramatically.
Conservative Leader Pierre Poilievre panned the budget as a spending "bonanza" and a "full frontal attack" on taxpayers.
Poilievre said the billions in new government spending announced today will "pour fuel on the inflationary fire."
He also pounced on the government's inaction on housing in this budget.
"We have an NDP government that is running inflationary deficits, bankrupting households and keeping young people living in their parents' basements," Poilievre said. He promised a government led by him would get unspecified "gatekeepers" out of the way to build "millions of new homes."
WATCH: Poilievre calls budget a 'bonanza of $43 billion of new inflation, debt and taxes'
Conservative Leader Pierre Poilievre says his party will vote against the 2023 budget.
The Canadian Alliance to End Homelessness also said the government unfairly ignored housing in this budget.
"It's clear the federal government does not see the scale and urgency of this crisis and [has] offered no solutions," said Tim Richter, the group's president and CEO.
The Residential Construction Council of Ontario, the industry group that represents home builders, said the feds are "nibbling around the edges of the problem" by reallocating some money previously earmarked for public housing repairs to new construction.
"The budget doesn't fully address the systemic problems that are delaying construction of much-needed housing. We need to get more housing underway quickly as demand is expected to continue," said Richard Lyall, the group's president.
NDP Leader Jagmeet Singh praised a budget that has his fingerprints all over it.
His party pressured the government to renew the GST rebate and stand up a pharmacare plan — two conditions of the supply and confidence agreement that the NDP signed with the Liberal government last year.
WATCH: Singh says budget offers the 'biggest expansion of our health care in a generation'
"We're proud that we've been able to force this government to deliver things," he said. "Let me be clear. There would not have been dental care in this budget without New Democrats."
Federal government capping excise tax on alcohol after outcry
CTV News Ottawa Senior Digital Lead
Updated March 28, 2023
The 2023 federal budget includes a major win for the beer, wine and spirits industries.
The increase in excise duties on all alcoholic products is being temporarily capped at two per cent starting next month instead of a planned 6.3 per cent increase.
"This proposal temporarily caps the inflation adjustment for excise duties on all alcoholic products at 2 per cent for one year only as of April 1, 2023," reads the budget.
It's a government concession after microbrewers and distillers said the higher excise tax would affect their bottom lines, already hurt by the higher cost of ingredients, manufacturing and other expenses.
Opposition parties had also been clamouring for the move, and passed a motion earlier this month calling on the government to scrap the increase altogether. The motion called the tax increase the largest on alcohol in the last 40 years.
The president of Beer Canada, which represents Canadian brewers, said in a statement he was "grateful" the government is reducing this year's excise tax increase.
"Faced with already very high tax rates, increased operating costs and depressed beer sales volumes, a 6.3% federal beer tax increase this year would have been devastating to brewers, brewery workers, the hospitality and tourism sector and hard-working Canadian consumers," CJ Hélie said in a statement.
"We are appreciative that Minister Freeland’s took action to provide the sector some breathing room to recover."
Alcohol excise duties are automatically indexed to inflation at the start of each fiscal year, hence the planned 6.3 per cent rise this year.
The two per cent cap is just for the 2023-24 fiscal year, the government says. After that, it's possible that inflation will have fallen, meaning the excise tax won't be as punishing.
The government expects to make $100 million in 2023-24 from the excise tax, the documents show.
