Budget 2023 is an opportunity to promote generational fairness
Canada has taken important steps to advance generational fairness by committing to $10aday child care, putting a rising price on pollution, and proposing new measures to address housing unaffordability. Generation Squeeze has been there to help create these policy victories.
Budget 2023 is an opportunity to continue to improve the health and wellbeing of all generations, from the early years onwards. Generation Squeeze recommendations on priority actions to achieve this goal are summarized below. Some require bold leadership – others point to easy steps to improve accountability. All are pressing, as we seek to build back better from the pandemic, make life more affordable for Canadians, and achieve our net-zero climate goals.
Generation Squeeze will analyze Budget spending and impacts by age, and mobilize findings across our 37,000+ network. We welcome opportunities to discuss our recommendations in more detail, and to collaborate with the Liberal government to make Canada work for all generations.
Budget 2023 should catalyze prompt implementation of the emerging national $10 a day child care system, and take steps to ensure that $10 a day is the maximum fee for everyone, not just the average, with no fee for low-income households. We should apply the same logic to child care as public education and medical care – more affluent individuals are asked to pay more via taxes – not via higher fees at the door. As we do, let’s be sure that all child care workers earn pay equity salaries, not parking-lot attendant wages.
Budget 2023 should commit to the principle that restoring housing affordability for all requires home prices to stall so that earnings can catch up, because a home should be in reach for what hard work can earn. To align policy with this principle, Budget 2023 should put a modest price on housing inequity via a small annual surtax on the most expensive homes, a proposal supported by 68% of Canadians according to recent polling. The surtax would apply to the top 12% of homes valued at $1 million or more – 88% of Canadians won’t pay a penny more. But it will help ratchet down the runaway home prices driving up wealth inequity and crushing affordability for younger generations, while raising $5 billion annually to invest in deeply affordable, energy-efficient rental and co-op homes. To further scale up the supply of such homes, Budget 2023 should align the mandates of the Canada Infrastructure Bank with the Canada Mortgage and Housing Corporation. See this report for more information.
Budget 2023 should demonstrate continued leadership on pricing pollution by legislating increases to the carbon price through to 2030. Pollution pricing is one of the five most critical policies needed for Canada to reach its emissions reduction goals, making it particularly pressing to enshrine our commitments in law. In addition, Budget 2023 should incentivize carbon sequestration using nature-based solutions. This notably includes: (i) preventing further damage to old growth forests, wetlands, and peatlands, given evidence of the enormous ecosystem and sequestration benefits they offer which cannot be meaningfully replaced once lost; and (ii) realizing the carbon drawdown potential of regenerative agricultural practices that increase soil carbon, and decrease reliance on water and fossil-fuel based inputs.
- Budget 2023 should improve accountability for investing in wellbeing from the early years onwards by integrating the following four metrics. This recommendation requires almost no new spending – just better leadership on monitoring.
i. Budget 2023 should report on the ratio between spending on key social investments relative to medical care spending because science shows that health does not begin with medical care. It begins where Canadians are born, grow, live, work and age. As the pandemic accelerates pressure to spend more on illness treatment via the Canada Health Transfer, it is increasingly important to make clear that investments in things like housing, child care, climate change, reconciliation, and poverty reduction are necessary to create health. Reporting on the social:medical spending ratio will help Canada prioritize investing in wellbeing and illness prevention with as much urgency as investing in treating illness after the fact. Budget 2023 should call on the Canadian Institute for Health Information to facilitate this reporting by using their data and expertise to track social spending, alongside spending on medical care.
ii. Budget 2023 should include an accurate and meaningful assessment of the total increase in Old Age Security spending, as part of a broader strategy to improve reporting on the age distribution of federal investments. The flawed age accounting methods currently used invite the mischaracterization that federal spending is ‘ageist’ against seniors – even though the largest budget increases routinely expand retirement income supports. This distortion of budget spending harms younger Canadians. See this study for more information. It's time to appoint a minister, deputy minister or other high-ranking official for generational fairness. It’s much more likely that the financial well-being of younger Canadians will be addressed as urgently as other age groups if there is a point-person responsible to budget fairly for all generations.
iii. Budget 2023 should task Statistics Canada to remedy inaccurate reporting on inflation in home prices. Data that under-estimate inflation by failing to adequately account for the skyrocketing price of established homes risk sending the wrong signal to the Bank of Canada as it manages interest rates and monetary policy. While low interest rates have economic benefits, they also contribute to driving up home prices, as the lower cost of borrowing allows buyers to bid up prices. This systemic problem erodes generational fairness by reducing affordability for younger residents while growing wealth for established (often older) home owners. See this report for more information.
iv. Budget 2023 should resource an expansion of the mandate for Canada’s Net-Zero Advisory Body (NZAB) to include a lead role in defining emissions reduction targets, and serving as a watchdog for their implementation. Current net-zero legislation includes little reporting for actions prior to 2030, limited transparency in emissions modeling and projections, no requirement for independent advice, and no clear implications for failure to meet targets. Whereas Canada’s Act permits the government to self-determine whether it is on track to meet targets, experience in other jurisdictions confirms the value of an independent body to provide non-partisan and evidence-based advice and monitoring. Empowering the NZAB to play this role will solidify accountability for meeting Canada’s climate goals.