Federal Budget 2024

The Top Line

This afternoon, Finance Minister Chrystia Freeland tabled the 2024 Federal Budget.

While a federal election is not imminent, the Budget reflects some significant political pivots by the Liberals, and clearly serves to begin positioning the Party for the next election, whenever it occurs.

Firstly, while the Liberals’ winning Election 2015 campaign and subsequent budgets were framed as making life more affordable for the middle class, Budget 2024 focuses on generational politics. The Budget notes that millennials have surpassed baby boomers as the largest age group, and goes on to mention “younger Canadians” 24 times, “millennials” 15 times, and “Generation Z” 21 times, compared to only four mentions of baby boomers. Moreover, the Budget cites “fairness for all generations” 26 times, almost as many times as “middle class” – the Liberals past-favourite political catch-all term.

That generational focus is no doubt driven by the demographic make-up of current public polling – the Liberal Party is trailing both the Conservative Party and the NDP amongst voters under the age of 44. That fact leads to the other major political pivot of the Budget: The politics of the cost of living.

Budget 2024 focuses on cost-of-living issues to an extent that no prior Trudeau government budget has. That emphasis is a necessary response to the extent to which Pierre Poilievre and his Official Opposition Conservatives have succeeded in centering those issues in the political discourse and owning them in the eyes of voters.

Past Trudeau government budgets have been framed by big-picture, national (and even international) policy issues, with sweeping policies and spending to match – think climate change, First Nations infrastructure, innovation and productivity, and new social services. While some of those things are present in Budget 2024, housing affordability, reducing consumer fees, and lowering the cost of living – all issues on which the Poilievre Conservatives have been dictating the political discourse of late – are the clear priority.

Overall, Budget 2024 can be seen as the first Liberal budget for which the Party hasn’t driven its own narrative – with the major exception of the COVID-19 pandemic. Rather than dealing with big, overarching policy narratives, Budget 2024 is focussed on addressing everyday financial concerns and resetting the political narrative around how the Liberals are viewed on such economic issues. Whether or not that is a success will be determined in the coming months.

A Deeper Dive

One area in which the Liberal government has not changed its stripes is spending. While Budget 2024 obeys some fiscal guardrails – see below – those still allow for debt and deficit accumulation that is higher than the projections found only as recently as the 2022 Budget and Fall Economic Statement. Overall, Budget 2024 includes $39.2 billion in net new spending (reduced only slightly from the $43 billion in net new spending in Budget 2023). As such, it continues to be apparent that Minister Freeland has baked some of the higher COVID-era spending into federal finances on a semi-permanent basis.

The Return of Fiscal Anchors

In 2021, amidst its response to the COVID-19 pandemic, the Trudeau government stopped using budgetary fiscal guardrails. The 2023 Fall Economic Statement re-introduced guardrails pertaining to deficits and debt-to-GDP ratio. Minister Freeland has emphasized that Budget 2024 meets those guardrails. Specifically, per the final figures and projections in the Budget:

  • The debt-to-GDP ratio will decline in 2024-25 and thereafter;
  • The 2023-24 deficit was below $40.1 billion; and
  • The deficit-to-GDP ratio will decline in 2024-25, and future deficits will be below 1% of GDP in 2026-27 and beyond.

That fiscal scenario was achieved in large part because several major new initiatives in Budget 2024 are loan programs. Interest-free long-term loans, while not recorded as government spending, can result in the same policy and political outcomes as spending. In a somewhat tighter fiscal environment, the Trudeau government is clearly increasingly relying on such loans, and no doubt hoping for their success as a long-term policy driver. There are also some tax increases (see below) to offset new spending.

Big picture, there is no path to fiscal balance in Budget 2024. Annual deficits will continue through the fiscal horizon of the Budget (2023/24 to 2028/29). Projected deficits for the coming years start at $39.8 billion in 2024-25 and decline only to $20 billion in 2028/29.

Housing and Homelessness

Housing affordability was the policy area in which the Government most thoroughly foreshadowed Budget 2024 content ahead of time. Following a flurry of announcements over the last two weeks, on April 12, the Government released a new Federal Housing Plan. That plan makes up the bulk of the housing chapter in Budget 2024.

Through the plan, the Government is committing to ensuring that no working Canadian spends more than 30% of their income on housing costs, while also providing supports for the homeless and housing vulnerable Canadians. The Plan aims to support the construction of 3.87 million new homes by 2030, which would be at least $2 million net new homes compared to projected construction absent the new plan. Meanwhile, the Federal Government is calling on other orders of government to facilitate the creation of an additional 800,000 new homes over the same period.

To accomplish those lofty goals, Budget 2024 allocates 8.5 billion in new housing funding – through a mix of spending and loan programs.

Looking ahead, there are two significant initiatives in the housing plan that will require broad stakeholder engagement in the coming months:

  • A Housing Design Catalogue for up to 50 housing designs that could be constructed across Canada with minimal, rapid approval; and
  • A Canadian industrial strategy for homebuilding.

Finally, the Federal Government is conducting a review of its entire lands portfolio to identify more land to divest for housing. For instance, starting this year, Public Services and Procurement Canada will aim to reduce its office portfolio by 50%, with a view to disposing Federal office buildings for housing. Those initiatives are potentially a major revenue generator for the Government, with a total of $606 million in savings from building and land dispositions projected by 2028/29.

Ultimately, though, very little of the $8.5 billion for housing affordability will flow this fiscal year. There will be a steep ramp-up in that spending in fiscal year 2025/26, before it plateaus for the balance of the fiscal outlook. Deploying housing funding quickly and effectively will be a key policy challenge for the Liberals, who need this spending to make a tangible impact for voters prior to the next election.

Affordability and Pocketbook Issues

Targeted initiatives to chip away at the costs of everyday goods and services were a hallmark of Conservative budgets under Prime Minister Harper. For example, the Harper government often acted to reduce wireless and financial fees in small-scale ways. Conversely, the Trudeau government has favoured direct funding transfers to individuals and the creation of new social programs as its vehicles for driving affordability. Budget 2024 drastically changes that approach in a way that is doubtlessly a reaction to Pierre Poilievre’s political success on pocketbook issues, as well as to the persistence of high inflation (inflation was 2.8% in February 2024, which is higher than the Government predicted for the end of 2023).

Notable pocketbook measures in the Budget include:

  • Intended amendments to the Telecommunications Act, to better allow Canadians to renew or switch between home internet, home phone, and cell phone plans;
  • Consultations, beginning this June, to develop a right to repair framework;
  • Capping non-sufficient funds fees charged by banks to $10 per instance, with regulation-making occurring in the coming months;
  • Increasing access to $0 per month fee bank accounts; and
  • Limitations on / transparency regarding some so-called junk fees, such as baggage and seating fees when booking airline tickets.

Conversely, in keeping with the prior affordability approach of the Liberals – creating new social programs, Budget 2024 allocates $1 billion over five years, starting this year, to work with provinces, territories, and Indigenous partners to create a National School Food Program, expanding access to current provincial and local programs of that kind.


In February, the Federal Government introduced Bill C-64, the Pharmacare Act, to deliver the first phase of a national, universal coverage pharmacare program. Budget 2024 allocates $1.5 billion over five years, starting this year, to launch that Program, which focuses for the time being only on diabetes medications and birth control. While Bill C-64 – which is foundational to the ongoing success of the Liberal – NDP Confidence and Supply Agreement – works its way through Parliament, stakeholders should not expect further expansion of the pharmacare plan.

Budget 2024 also allocates $6.1 billion over six years, starting this year, and $1.4 billion per year ongoing, for a new Canada Disability Benefit. The Government aims to begin providing benefit payments in July 2025, after consultations with persons with disabilities.

Artificial Intelligence and Research and Development

Budget 2024 allocates $2.4 billion to spur job creation in Canada’s Artificial Intelligence (AI) sector, help researchers and businesses develop and adopt AI, and to fund AI safeguards. Notably, only $295 million of that funding will be spent this year and next, before ramping up in subsequent years.

Tax Measures

The most significant tax measure in the Budget is a capital gains tax increase. Specifically, the inclusion rate on capital gains realized annually above $250,000 by individuals will be increased from one-half to two-thirds, effective June 25, 2024. For capital gains realized annually up to $250,000 by individuals, the inclusion rate will remain at one-half. Concurrently, the inclusion rate on all gains realized by corporations and trusts will increase from one-half to two-thirds, effective June 25, 2024. Exemptions for capital gains from the sale of principal residences and the lifetime capital gains exemption on the sale of small business shares and farming and fishing property will remain in place.

Additionally, Budget 2024 proposes a new Capital Entrepreneurs Incentive, which will reduce the inclusion rate to 33%, on a lifetime maximum of $2 million, for certain eligible capital gains related to entrepreneurship.

Finally, Budget 2024 announces a potential new tax on residentially zoned vacant land, for which consultations will be launched later this year, and increases taxes of tobacco and vaping products.

One policy area that is notably de-emphasized in Budget 2024 is climate and clean technology. In past Trudeau budgets, entire chapters have often been dedicated to those issues, but, this year, they’re folded into broader chapters. That said, the budget includes a few significant tax incentives aimed at driving clean growth, such as: A Clean Technology Manufacturing investment tax credit, a new Electric Vehicle Supply Chain investment tax credit, and an allocation of $607.9 million over two years, starting this year, to recapitalize the major federal consumer EV purchase rebate program.

Opposition Reaction

Official Opposition Leader Pierre Poilievre immediately indicated the Conservatives will oppose the Budget, while highlighting that it is the ninth deficit budget by the Liberal government.

NDP Leader Jagmeet Singh went to great lengths in his press reaction to give himself and his party credit for many of the measures in the Budget, including protections for renters, pharmacare, and the Canada Disability Benefit. He withheld giving firm support to the Government on the coming budget votes, until he hears from the Prime Minister about some NDP concerns – such as the lack of a new excess profit tax in the Budget and security of public service jobs as part of a public service spending review exercise. However, just as occurred last year, it is fairly clear the NDP will support the Budget and try to get maximum political credit for it.

What’s Next

At the beginning of Minister Freeland’s budget speech, she put forward the customary motion for approval of the Budget. Tomorrow, April 17, the first day of budget debate will occur, and the Official Opposition Conservatives and third-party Bloc Québecois will propose amendments to the Minister’s motion. Thereafter, debate about the Budget will occur over the next four sitting days of Parliament (April 18, 19, and 29) and the vote on the Minister’s motion to approve the Budget will occur Tuesday, April 30.

While that is arcane procedure, each vote on those Motions is a confidence measure, so the minority Liberal government will require opposition support on them in order to retain power. Given the current strength of the Liberal – NDP Confidence and Supply Agreement, there is very little chance of the government falling on a budget vote.

Once the Budget has been passed, the Government can move forward with the first of the two Budget Implementation Acts (BIA). Since the NDP are once again supporting the Liberals to impose time allocation on debates in the House of Commons, it’s possible that the first BIA can be passed before Parliament adjourns in June.

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