The federal government just released its 2021 budget. Budgets are always important because they reveal the government’s priorities, but as the first budget since the start of the pandemic, this one is the most critical in decades.
The pandemic has laid bare the deep divisions in our society and the holes in our social safety net. Food insecurity is on the rise. Since the start of the pandemic, it has increased by 39 per cent. Now one in seven people in Canada are food insecure. This crisis disproportionately affects Black, Indigenous and other racialized communities because of systemic racism.
As we continue on the long road to recovery from COVID-19, we have an opportunity to restart the Canadian economy equitably, and truly address the root causes of food insecurity and poverty. This must be accomplished by increasing incomes and strengthening social programs.
Below, we examine how this new budget hits the mark, and where it misses crucial opportunities for real change.
What we like about the budget
National childcare program: $10 a day by 2025-26
By far the biggest news from this budget is the deep and historic investment in establishing a national childcare program.
In much of the country, child care is unaffordable. While the Canada Child Benefit has reduced severe food insecurity among families with children by 30 per cent, it comes nowhere near covering the cost of child care, which can be more than $20,000 per year per child.
This weighs on Canadian families, but it also damages the economy by keeping women out of the workforce. With more women working, a national childcare program could pay for itself by increasing GDP by two percentage points and raising tax revenues by $8 billion per year.
The federal government has clearly made child care its central social policy in this budget, investing $30 billion over the next five years and $8.3 billion annually from then on to create a national childcare program. The end goal is to create a $10 per day program by 2025-26. In the meantime, the federal government aims to reduce average fees by 50 per cent by the end of 2022.
This news will come as a relief to parents who have struggled to balance work, finances and child care through the pandemic. Specifically it will be a relief to women, who have been among the hardest hit in the economic downturn.
Of course, this plan will require investment by provinces and territories, and Premiers are not always happy to follow the lead of the federal government. The commitment is extremely promising and advocates will need to keep the heat on provincial and territorial governments to ensure this is implemented on schedule.
Extension of COVID recovery benefits
The budget announces up to 12 additional weeks of the Canada Recovery Benefit, for a maximum of 50 weeks. For the first four weeks, the benefit will remain at $500 per week, and will decrease to $300 per week in July as the economy opens up.
The Canada Recovery Caregiving Benefit will also be extended by an extra four weeks. The budget makes room for further extensions to these benefits, as well as to regular Employment Insurance benefits, should this be necessary.
With the third wave of the pandemic hitting much of the country, these extensions are critical and will be a relief to Canadians who remain unemployed or who are taking care of loved ones.
Black-led Philanthropic Endowment Fund
Black Canadians experience food insecurity at a rate of 28.9 per cent, compared to just 11.1 per cent for white Canadians. During the pandemic, systemic racism and inequities have been further exacerbated.
The budget announces $200 million to establish a Black-led Philanthropic Endowment Fund, which would fund Black-led organizations, combat anti-Black racism, and improve social and economic outcomes for Black Canadians.
There have been calls for more intentional investment in Black communities and this fund is one long-awaited step forward.
Increases to Old Age Security
Seniors have been among the hardest hit by the pandemic. This budget increases Old Age Security payments to seniors 75 and older by 10 per cent, which will increase seniors’ incomes by $766 in the first year and in following years increase with inflation.
While this increase supports all Canadian seniors, the investment would have been better spent on another increase to the Guaranteed Income Supplement—specifically targeted to low-income seniors who need it the most.
$15 federal minimum wage
The budget also establishes a $15 federal minimum wage, which will be tied to inflation. While this is great news for the 26,000 federal employees making less than $15 an hour, it’s important to note that it will not affect provincial and territorial minimum wages.
Even with the valuable investments noted above, single working-age adults are being left behind once again. The budget also makes no further investment toward a national pharmacare program.
Ongoing support for single working-age adults
Recent increases to the Canada Child Benefit and the Guaranteed Income Supplement, coupled with the newly announced Canada Disability Benefit, raise the income floor for families with children, seniors, and people with disabilities. This is exactly the direction we should be moving in.
However, beyond short-term COVID supports, Canadians between the ages of 18 and 64 are being left behind. Single working-age adults experience poverty at three times the rate of the average Canadian and receive very little government support, often relying on low-wage jobs or pitifully low social assistance payments.
An adjustment to the Canada Workers Benefit (CWB)—a tax benefit for low-wage workers—is a step in the right direction, but it doesn’t support people without employment income. And the income it provides to workers is modest, at a maximum of $1,381 per year for a single adult.
The CWB must be modified so that it provides income to people who do not work as well as significantly increased in order to reduce deep poverty levels among single adults.
One in five Canadians has trouble affording their prescriptions, and three million people simply do not take their medications because they can’t afford them.
The last federal budget made investments toward a national, universal pharmacare program that would ensure all Canadians could afford their prescriptions. Unfortunately, this budget provides no further funding to move this program forward.
What we’ll be watching
EmpIoyment Insurance Reform
COVID-19 had devastating effects on the labour market. At its peak in April 2020, 5.5 million workers were impacted by the economic shutdown.
While the employment rate has significantly rebounded, there are still 1.5 million unemployed Canadians, up 32.4 per cent from before the pandemic. As with much of the pandemic’s fallout, unemployment has affected some groups more than others: employment growth has been slowest for racialized Canadians and young women.
The government is proposing legislative changes that would introduce a 420-hour entrance requirement no matter where you live in Canada and extend EI sickness benefits from 15 to 26 weeks. However, any further reform will come after a two-year consultation, starting in 2021-22.
It remains to be seen whether there will be meaningful action to ensure low-wage workers benefit from EI, like increasing the 55 per cent wage substitute, providing a minimum benefit, or expanding access to the program. These actions are urgently needed to create an EI program that will adequately support the workers who need it the most.
Canada Disability Benefit
Approximately 2.7 million Canadians live with a severe disability. People with disabilities are more likely to be unemployed and to live in poverty, and they often have a higher cost of living than people without disabilities. Many subsist on provincial disability payments, which leave them well below the poverty line.
For years, disability activists have been calling for a tax benefit that would increase the incomes of people living with disabilities and provide them with a basic standard of living.
This budget invests in a three-year consultation process to help the federal government design a new Canada Disability Benefit. While this is good news, we need to see further details to determine who will get support and how significant it will be. The consultation must lead to bold action for people with disabilities, who have long been left behind.
Funding for Indigenous communities
The federal government is allocating $18 billion to Indigenous communities, with investments ranging from improving health outcomes, to a mental wellness strategy, to infrastructure. While this is a massive investment, there is also a massive gap to be bridged.
This funding also includes $163.4 million over three years to expand Nutrition North Canada (NNC), the program that subsidizes nutritious food in Northern communities.
Food insecurity in Northern communities is an urgent problem, and it has only increased, having ballooned to 57 per cent in Nunavut. Further solutions, such as strengthening traditional food systems, will need to be explored in order to adequately address this structural problem that is tightly linked to colonialism.
This budget makes modest investments in affordable housing, notably an additional $1.5 billion for the Rapid Housing Initiative, a program that aims to rapidly build new affordable housing units, and a modest increase to the Canada Housing Benefit to provide financial support to help women and children fleeing violence pay their rent.
These and other investments are welcome steps forward, but more action is needed from all levels of government to address the urgent need for affordable housing in much of the country.
Moving Beyond Hunger
Thanks for taking the time to read this budget analysis. It's important that we work together to keep the pressure on, especially with a federal election on the horizon. We will keep advocating for a working-age tax credit and other policies that will make life more affordable and equitable so everyone can afford to put good food on the table.
See our Beyond Hunger report for our policy recommendations and how you can take action in your community.