Canada This Week - Federal Outlook April 15-19
Welcome to Canada This Week a new political update which will look at the stories of the week ahead.
This week expect the three following topics to capture the headlines:
The Federal Budget: set to be tabled on Tuesday, and will have significant impacts on the Canadian economy, especially on how the Bank of Canada will adjust interest rates through the fall of this year.
Alberta’s Municipal Gatekeeper Legislation: The Province of Alberta will look to challenge the Federal Government’s planned housing funding for the province through the introduction of legislation which will enable the province to act as the “gatekeeper” for funds intended for municipalities by the Federal Government.
Electoral Reform: The Liberals have tabled a bill to update the Elections Act, aimed at increasing the number of advanced voting days and strengthening protections against foreign interference in elections. This comes following the Prime Minister’s testimony last week to the committee looking into foreign interference in the 2021 Federal Election.
Federal Budget 2024 – A Desperate Fiscal Policy
Finance Minister Chrystia Freeland will announce the 2024 Federal Budget on Tuesday.
In the lead-up to the unveiling of Canada's 2024 Federal Budget, Prime Minister Justin Trudeau and his Liberal party are navigating choppy political waters. With polling numbers sliding, the Trudeau administration has embarked on a nationwide spending spree, promising a hefty $28 billion across various sectors such as housing, infrastructure, and defense. This flurry of funding announcements seems to be part of a strategic attempt to regain public favor as the Liberals gear up for the 2025 election year.
Public sentiment, however, presents a complex picture. Recent polls indicate a significant concern among Canadians regarding the federal deficit, with many feeling the government is overspending. Despite this, there's notable support for increased spending in areas like healthcare and national defense, suggesting that the public's appetite for fiscal prudence may have exceptions for essential services. On the political front, Trudeau's leadership is increasingly under scrutiny. A substantial portion of the populace now believes it's time for a change in the Liberal leadership, signaling potential challenges ahead for him retaining his role as party leader in future elections.
Moreover, the pre-budget announcements have not significantly shifted public opinion about Trudeau or his party. Impressions of Trudeau continue to worsen, while his main rival, Conservative leader Pierre Poilievre, seems to be gaining a more favorable outlook from the public. Despite extensive campaigning and policy announcements, there's a pervasive sense that while specific policies might be popular, they haven't yet translated into broader support for Trudeau or his government.
This complex political landscape sets the stage for a federal budget that Trudeau likely hopes will solidify his policy legacy while attempting to stabilize his party's electoral prospects amidst growing public and political pressure for leadership change and fiscal restraint.
As we edge closer to the unveiling of the Canadian Federal Budget for 2024 on April 16, the air is thick with anticipation about the government's planned fiscal maneuvers aimed at bolstering economic growth and making the cost of living more manageable for Canadians. Here's what we're hearing from the corridors of power and expert analyses on what to expect:
The Heart of the Matter: Housing and Affordability
The spotlight is expected to shine brightly on housing affordability. With a proposed slew of measures to fast-track home construction and enhance accessibility to affordable housing, the government appears committed to extending a lifeline to those grappling with skyrocketing housing costs.
Tech Giants on Notice: Digital Services Tax (DST)
Echoing global trends, Ottawa might roll out updates on the Digital Services Tax, targeting the hefty revenues from digital ads and streaming services. This move aims to level the playing field, ensuring that tech behemoths contribute their fair share to the Canadian economy.
Closing Loopholes: Global Minimum Tax
On the international front, we're looking at potential advancements in the Global Minimum Tax, designed to prevent multinational enterprises from profit shifting to low-tax havens. Details on implementation timelines and legislative progress since last year's discussions on this issue are eagerly awaited.
Empowering Workers: Employee Ownership Trusts (EOTs)
The budget might also detail incentives for business succession through Employee Ownership Trusts, which could include tax exemptions on capital gains from business sales to such trusts. This initiative supports employee ownership and business continuity.
A Broader Tax Perspective
Expect a slew of tax reform updates, including tweaks to existing taxes and the introduction of fresh measures aimed at fostering economic stability and growth.
Anticipated Tax Hikes
We're bracing for hikes in payroll taxes affecting both the Canada Pension Plan and Employment Insurance contributions, likely pinching both workers and businesses. An uptick in the carbon tax could increase costs for drivers and homeowners, while a rise in alcohol excise taxes will make your drinks pricier. High earners, watch out: targeted tax increases are coming your way, underscoring efforts toward fiscal equity.
Tax hikes are expected in the 2024 Federal Budget to cover the cost of recent announcements.
In summary, the forthcoming budget is poised to blend growth-stimulating investments with necessary tax adjustments to tackle the twin challenges of economic pressures and funding essential sectors like housing and infrastructure. Each move meticulously planned to craft a more equitable and prosperous future for all Canadians (Canada.ca) (Global News) (KPMG) (KPMG).
Albertas’ Municipal Gatekeeper Legislation
Alberta's introduction of the Municipal Gatekeeper Legislation is a significant move in the province's ongoing conflict with the federal government over jurisdiction and funding allocations. This legislation will allow Alberta to control agreements between its municipalities and the federal government, effectively acting as a gatekeeper for any federal funds directed towards municipalities. Premier Danielle Smith argues that this step is necessary because the federal government has not been fair in its funding distribution, particularly concerning housing grants under the Housing Accelerator Fund. She contends that Alberta has been shortchanged compared to other provinces and is subjected to onerous conditions to access these funds.
The proposed law will require any entity regulated by Alberta, such as municipalities, schools, and health authorities, to obtain provincial approval before entering into funding agreements with Ottawa. This could potentially delay or complicate projects intended to boost local infrastructure and housing development as expressed by critics like Edmonton Mayor Amarjeet Sohi, who fears it could stall economic growth and infrastructure projects.
This legislation mirrors similar measures in Quebec and is part of a broader strategy by the Alberta government to assert its authority over provincial matters, reflecting longstanding tensions with the federal government over policy directions, especially in areas like energy regulation and environmental initiatives. The Alberta government plans to consult stakeholders about the bill, which, if passed, wouldn't take effect until early 2025.
The introduction of this bill is not just a local issue but a reflection of the broader debates over federalism and the balance of power within Canada.
Electoral Reform – Safe Guarding Canadian Elections
Bill C-65 announced earlier this winter aimed at protecting Canadian Elections will be a discussion point in Ottawa this week.
The Liberal government has recently tabled a bill aimed at updating the Canada Elections Act. This move is part of an ongoing effort to increase voter accessibility and safeguard the electoral process against foreign interference. Specifically, the proposed amendments would extend the advanced voting period by adding two more days and solidifying a permanent campus voting program, which is designed to enhance voter participation among students.
The push for these amendments follows significant concerns about foreign interference in Canadian elections, particularly highlighted by Prime Minister Justin Trudeau's testimony regarding the 2021 Federal Election. This legislative effort seeks to address vulnerabilities by enhancing the regulatory framework that governs how elections are conducted in Canada, ensuring that they remain free from foreign influence and that all citizens have greater opportunities to participate.
Despite these measures, there has been criticism from some quarters that the amendments may not go far enough to deter the sophisticated nature of foreign interference. Critics argue that while the changes are a step in the right direction, more robust measures may be needed to effectively counteract the evolving tactics of foreign entities aiming to disrupt Canadian democratic processes.
This ongoing dialogue highlights the challenge of balancing effective safeguards with maintaining an open and accessible voting system, reflecting the complexities of modern electoral integrity and security efforts.
What to Look For
This week, expect the Federal Government to assertively defend its new budget against criticism, emphasizing its commitment to enhancing affordability and fairness for the middle class, while ensuring that wealthier Canadians contribute a fair share. This stance is anticipated to be particularly pronounced in discussions surrounding Alberta Premier Danielle Smith's controversial municipal gatekeeper legislation. The federal stance will likely frame this legislation as an unnecessary obstacle to the development of affordable housing in Alberta, arguing that it complicates the federal efforts to address housing shortages and improve living conditions for ordinary Albertans. The government's messaging will focus on reducing economic disparity and facilitating essential services and infrastructure.
