Younger generations and so many others have been hit hard by the impacts of the coronavirus. In the midst of multiple lockdowns, we’ve had to find ways to pay for housing and other major costs without enough income. We’ve been forced to juggle caring for kids and working. We’ve watched jobs evaporate as tuition fees rise. These struggles are so intense because of how close to the edge people were before the pandemic. Governments need to confront the ongoing squeeze facing younger and other people if they truly want to protect and help us recover from the economic and health crises we’ve become so vulnerable to.

Budget 2021 is the federal government’s chance to invest in a recovery that helps everyone who needs it, in ways that also lift up younger generations for the long term. Gen Squeeze has six recommendations to guide the budget’s design, supported by specific sub-recommendations.

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Recommendations: Summary

Recommendation #1: Make an explicit commitment to pursuing the goal that all Canadians can afford a home that meets their needs by 2030, either as a renter or owner, backed by a comprehensive plan for achieving this goal.

Recommendation #2: Use the 2021 budget to scale climate solutions, while driving a green recovery to the pandemic, through major investments in renewable energy, home and building retrofits, public transit and job training.

Recommendation #3: Support a thriving workforce and promote gender equality with a commitment to universal child care, which includes allocating $2 billion to child care in 2021-22.

Recommendation #4: Help drive economic recovery, a more equitable distribution of wealth and much-needed investments in social programs by exploring ways to reduce income tax for middle and low-income earners and eliminate tax breaks for the wealthy, including those with considerable housing wealth.

Recommendation #5: Redesign Canada’s federal fiscal and economic policy framework to focus on well-being instead of GDP, prioritizing investment in the different social determinants that foster health and well-being.

Recommendation #6: Improve and deliver annual reporting on age trends in public finance to better assess the fairness and adequacy of new investments in those under the age of 45 by comparison with growth in Old Age Security, as well as the growth of government debt.

Recommendations: Detailed

Housing affordability for all

Covid-19 has highlighted and exacerbated Canada’s housing affordability crisis, or the growing disconnect between home prices, rent costs and local incomes. Ensuring that everyone can afford a home that meets their needs is an essential part of our recovery, including by reducing the debt burden on individuals so that they can participate more fully in the broader economy.

Recommendation #1: Make an explicit commitment to pursuing the goal that all Canadians can afford a home that meets their needs by 2030, either as a renter or owner, backed by a comprehensive plan for achieving this goal.

Additionally:

• Increase rental supply and affordability by promoting better regulation of short-term rentals, including by working with provinces to introduce legislation that compels short-term rental platforms like Airbnb to only publish legal listings, and share data needed to ensure compliance with applicable laws.
• Provide bonus federal funding for municipalities who reach housing targets.
• Promote the construction of new rental housing by exempting the construction costs of new rental housing and costs of renovating rental housing from GST, with the latter contingent on protections for renters from renoviction.
• Reduce renter’s energy costs and upgrade the quality of existing rental stock by ensuring the CMHC’s Green Home initiative includes a dedicated channel for rental apartment owners and is designed to maximize impact for renters.
• Reduce home prices by implementing a national vacant homes tax on non-Canadians who don’t live in Canada, as promised in the fall economic statement.

Advancing climate solutions

Action on climate change is an essential part of protecting the well-being of younger and future generations, and building an economy that’s good for people and the planet. Budget investments aimed at rebuilding our communities and country must support Canada’s commitment to achieving its net zero target.

Recommendation #2: Use the 2021 budget to scale Canada’s action on and commitment to climate solutions through major investments in renewable energy, home and building retrofits, public transit, and job training that creates new employment opportunities for young people and supports a Just Transition.

Additionally:

• Invest $1.25 billion in workforce development for energy efficiency and climate resiliency, prioritizing programs that ensure new jobs pay well and are accessible to younger people as well as women, Indigenous peoples and others.
• Invest in research to identify energy efficiency measures that also promote housing affordability, for rental and owned housing.
• Ensure this and future budgets integrate “carbon budgets” that report scientifically-sound evidence about the capacity remaining in the atmosphere to absorb additional carbon, and the responsibility of Canada to contribute its fair share to global emissions targets, in light of binding five-year milestones for meeting Canada’s net zero goal.

Affordable childcare for all

Good quality, affordable, inclusive child care is key to a thriving workforce and economy, and essential to promoting gender equality. Covid-19 has further illuminated the important role that child care plays for kids, workers and the economy, and the need to make investments in child care that mitigate the disproportionate impact the pandemic has had on women.

Recommendation #3: Allocate $2 billion to child care in 2021-22, and increase annual spending by $2 billion each subsequent year ($4 billion in 2022-23, $6 billion in 2023-24, etc.) until reaching one per cent of GDP.

Additionally:

• Help young parents in need of child care right now by putting $2 billion in a reserve fund (to supplement the $625 million transfer to the provinces and territories for ELCC under the Safe Restart agreement) to assist further the safe reopening of licensed child care centres.

Promoting fairness through taxation

The wealth gap in Canada is growing, thanks to low and stagnant wages for many workers and a lack of mechanisms for ensuring those who have earned or gained significant wealth are paying their fair share back into the system. To promote wealth equality and a just recovery from the pandemic, new approaches to balancing these scales are required.

Recommendation #4: Help drive economic recovery, a more equitable distribution of wealth and much-needed investments in social programs by exploring ways to reduce income tax for middle and low-income earners and eliminate tax breaks for the wealthy, including those with considerable housing wealth.

Additionally:

• Establish a Tax Shift Special Commission to assess how to best rebalance our tax system in ways that benefit the vast majority of Canadians.
• In addition to investigating ways to generate revenue from different forms of wealth, including high-value homes, also investigate ending tax breaks where only a portion of the income garnered is taxed, such as in the case of capital gains, dividends and stock options; and crack down on tax avoidance.

Well-being as a framework for budgeting

A prosperous economy is important for fostering high quality of life in Canada. But GDP is an inadequate measure of a prosperous economy, and most Canadians view factors beyond the economy as also being central to their daily life – like health, safety, a stable climate, time with family and friends, etc. A well-being framework will ensure decision makers evaluate our policies and budget decisions from this perspective, rather than just focusing on GDP.

Recommendation #5: Redesign Canada’s federal fiscal and economic policy framework to focus on well-being instead of GDP, prioritizing investment in the different social determinants that foster health and well-being.

Additionally:

• Ensure the framework is specifically designed to support federal and provincial cabinets and treasury in their decisions about how to allocate available government funds between departments. This is necessary to disrupt the trend that has seen investment in illness treatment grow faster than investment in the social determinants of health, especially for younger generations
• Expand national economic updates to track well-being indicators, including the ratio of earnings to average home prices; ratio of social spending relative to medical spending; the proportion of children and parents who have access to quality, affordable child care; and progress towards meeting net zero targets.
• Fiscal sustainability should be included as a cross-cutting lens by which all other parts of the well-being framework are analyzed. This implies prioritizing metrics that monitor public investment by age and generation, looking to the past and anticipating the future.

Intergenerational justice in budgeting

Formally integrating an adequate age analysis into public finance decision-making is necessary if our governments, media and citizens are to monitor effectively the degree to which governments budget fairly for all generations.

Recommendation #6: Improve and deliver annual reporting on age trends in public finance to better assess the fairness and adequacy of new investments in those under the age of 45 by comparison with growth in Old Age Security, as well as the growth of government debt.

Additionally:

• Monitor and report data about how younger and older cohorts are doing today relative to the same age cohorts in the past. Generation Squeeze has developed and published methods that would make it possible to implement these reviews as part of GBA+ analyses.
• Establish a special committee to study intergenerational fairness in Canadian public finance.