The $535 billion federal budget projects a $39.8 billion deficit

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OTTAWA – The 2024 federal budget will provide “generational fairness” to young Canadians by raising taxes on those who have benefited from Canada's economic powerhouse, Finance Minister Chrystia Freeland said Tuesday during a debate on the document in the House of Commons.

The budget comes as the Liberals see their once-healthy voting base among young people evaporate in favor of the Conservatives, largely at a time when young Canadians feel the economic deck is stacked against them.

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Freeland denied Tuesday that his latest budget was largely a political exercise, but nonetheless acknowledged that it is “harder to establish yourself” in Canada than it was in previous generations for anyone under 40.

Middle-class income and a good job are no longer enough to feel economically secure, he said.

“It's not really fair what they're fighting right now,” Freeland said at a press conference the day before his budget speech on the House floor.

Freeland said the 2024 budget is designed to address this issue, to “open the door to the middle class” for more Canadians. The word justice is used 50 times in the budget document itself.

Over the next five years, $8.5 billion will be spent to build millions of new homes and about $2.6 billion to improve student aid and grant programs and create new job opportunities.

“We are taking action today to ensure justice for every generation,” Freeland said.

Overall, projected budget spending will increase to $535 billion in 2024-25, compared to $497.5 billion in 2023-24. The deficit is projected to be $39.8 billion, compared to $40 billion last year.

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There is $11.5 billion in new spending this year and $53 billion over the next five years.

Freeland said he would maintain the government's fiscal stance, keeping the deficit below $40 billion and less than one percent of GDP from 2026-27.

Ottawa is paying in part with better-than-expected economic growth and targeted changes to the capital gains tax that will raise more than $19 billion over the next five years.

Currently, Canadians only pay taxes on 50 percent of the money they make on capital gains, which is mostly the gain on the sale of an asset like a stock.

Freeland adjusts it to 66 percent for all capital gains made by corporations and trusts and for individuals over $250,000.

He said the change should affect the 0.13 per cent of Canadians with an average annual income of $1.4 million. He said he knows the tax increase will backfire.

“But before they complain too much, I want the one percent of Canada — the 0.1 percent of Canada — to consider this: what kind of Canada do you want to live in,” he asked in his speech.

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The budget includes money for new national dental care and pharmaceutical programs, as well as previously announced spending on a new national school lunch program.

“Would you like to live in a country where you can tell someone's salary by their smile?” Freeland asked.

“Do you want to live in a country where children go to school hungry?” Do you want to live in a country where a teenage girl gets pregnant because she can't afford contraception?'

James Orlando, TD's director of economics, said that while it was true that the budget would keep the government within its fiscal anchors on paper, the new tax hike was not good for productivity and the new spending was “more than we thought”.

The budget, he said, is designed to envision the economy that the government believes Canadians want in the future.

“This is not just to boost the economy today, but to improve the trajectory of the Canadian economy going forward,” he said.

“They're saying they're looking at the long-term benefits of their spending right now, not just the immediate impact on the Canadian economy.”

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NDP Leader Jagmeet Singh, who has struck a deal with the Liberals for support on key votes like the budget, isn't promising immediate support for the government's latest spending plan.

The budget includes many NDP ideas, including a landlord and pharmacy protection fund, but falls short of “corporate greed,” Singh said.

Conservative leader Pierre Pouilleuvre was less skeptical.

“Conservatives will vote against this wasteful, inflationary budget like a pyromaniac throwing gas on the inflationary fire he has lit,” Polievre told the House.

“It's getting too hot and too expensive for Canadians, so we need an election on the carbon tax to replace it with a Conservative government.”

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Budget 2024: The key numbers in the Liberals' latest spending plan

535 billion dollars: Total Government Expenditure for FY 2024-25.

$39.8 billion: The overall deficit is just shy of the $40 billion forecast in the Autumn Economic Statement.

$11.5 billion: Amount of new expenses this year.

$8.5 billion: What is being spent on building a new home?

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$3.87 million: The number of new houses the government says will be built by 2031 in its housing plan.

$2.6 billion: The Liberals say it will go to “generational fairness” to ease education costs and create new jobs for young Canadians.

$19.4 billion: The amount of revenue Ottawa expects over five years from targeted changes in capital gains taxes.

$1.5 billion: Five-year cost of universal coverage of contraceptives and diabetes medications and supplies for the next five years.

$1.7 billion: What Ottawa thinks it will get after five years of raising excise rates on tobacco products.

$8.1 billion: Increase Canada's defense budget over the next five years.

1.76: By 2030, defense spending as a share of GDP will still fall short of NATO's two percent target.

50: How many times the word “justice” appears in the budget document.

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