Recommendations for the 2022 Federal Budget
Canada has taken important steps to advance generational fairness by committing to $10aday child care, putting a price on pollution, and proposing new measures to address housing unaffordability. Generation Squeeze has been there to help create these policy victories.
Budget 2022 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 and action - others point to easy steps to improve accountability. All are pressing as we seek to build back better from the pandemic.
We welcome the opportunity to discuss these recommendations in more detail, and to collaborate with the Liberal government to make Canada work for all generations.
- Budget 2022 should ensure that the emerging national child care system sets $10 a day as 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 2022 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 2022 should put a modest price on housing inequity via a small annual surtax on home value over $1 million. The surtax would apply to the top 10% most valuable homes – almost 90% 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 2022 should align the mandates of the Canada Infrastructure Bank with the Canada Mortgage and Housing Corporation. See this report for more information.
- Budget 2022 should provide a credible plan to eliminate all fossil fuel subsidies in Canada by 2023, as promised by the Liberal party in the last election. Savings should be reallocated to scale up renewable energy and carbon drawdown through regenerative agriculture and other tools. This action is necessary to reach net-zero goals, and mitigate growing climate risks that are already harming our country’s economy, infrastructure and communities.
- Budget 2022 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 monitoring.
i.Budget 2022 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 increase spending on illness treatment via the Canada Health Transfer, it is increasingly important to make clear that child care spending is health spending; improving housing affordability is health spending; poverty reduction, reconciliation, and climate change are all health spending, etc. Reporting on the social/medical spending ratio will help Canada prioritize investing in well-being and prevention of illness with as much urgency as we invest in treating illness after the fact.
ii.Budget 2022 should include an accurate and meaningful assessment of the total increase in Old Age Security spending, as part of a strategy to improve reporting on the age distribution of federal investments. Current flawed methods invite the mischaracterization that federal spending is ‘ageist’ against seniors – even though the largest budget increases routinely expand retirement income supports. Such distortions of budget realities harm younger Canadians. See this study for more information.
iii.Budget 2022 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 intergenerational fairness by reducing affordability for younger residents while growing wealth for (often older) home owners. See this report for more information.
iv.Budget 2022 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. Currently, 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 the Act currently 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.