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Justin Trudeau’s New Budget Isn’t Really a Break With Austerity

Canada’s Liberal government recently tabled its first budget since the pandemic began, and it contains some modest shifts away from austerity economics. But these policies fall far short of what’s needed, and the core of Trudeau’s budget is about maintaining the status quo.

Canadian prime minister Justin Trudeau speaks during a news conference in Ottawa, 2021. (Dave Chan / AFP via Getty Images)

Last Monday, Justin Trudeau’s Liberal Party unveiled its 2021 budget — the first since the COVID-19 pandemic hit Canada. The budget is a big-tent plan that is aimed at major factions of the Canadian polity. With billions in new spending pledges for early learning and childcare, post-pandemic economic recovery, and “green investments,” the 724-page tome is undeniably a document geared toward the next election.

No doubt Trudeau’s party, which is now leading in the polls, is hoping to cleave off support from the New Democratic Party (NDP). The feint leftward by the Liberals will most likely put the NDP on the back foot — not for the first time — and make it difficult for the party to differentiate its platform from that of the Liberals.

The budget clearly signals that Trudeau is hitting the pause button on austerity, but we can only consider it generous by the hollowed-out standards of our political age. Ultimately, the budget merely offers crumbs from the master’s table. It’s an opportunity for socialists and left-wing movements to expose the genuine points of difference between their political vision and that of Trudeau.

The Good

Although it does have some bright spots, the Liberal government’s budget is mostly a dithering, uninspired program that leaves major social needs unaddressed. Even so, if the budget passes and the government honors its commitments, many social movements in Canada will consider it to be partial vindication of their efforts.

For instance, the budget again commits itself to a federal minimum wage of $15, with adjustments for inflation. This comes on the back of tireless, years-long organizing campaigns by Fight for $15 and Fairness. The government could still renege on this plan, as it has already done several times before, but it may well prove to be a victory for the thousands of workers whose pay is federally regulated.

During the pandemic, Canada has had embarrassingly high mortality rates among seniors. The Liberals have committed $3 billion to eldercare, which will come with national care standards (though not for another year).

The government has also budgeted $30 billion to implement a $10-a-day national childcare plan, following the  Quebec model, over the next five years. This commitment is long overdue. It is much less a reflection of Liberal magnanimity than of the decades of organizing by feminists, labor activists, and parent organizations around such demands.

As the Wellesley Institute points out, affordable childcare programs are a crucial tool for reducing income inequality. They enable parents, especially women, “to access higher educational and employment opportunities … benefit[ing] families in greater need.” Many critics have noted the ways in which the pandemic, punctuated by school closures and precarious work, has exposed the gaps in Canada’s multiple childcare systems.

If the plan is going to be enacted, it will need consent from the provinces and territories, which could prove extremely difficult to attain. We should remember that this latest commitment comes from a party that has promised some kind of national childcare program for almost thirty years.

The Bad

Unfortunately, these few bright spots aren’t representative of the overall document. For one thing, it’s missing any kind of pharmacare plan, even though the Liberals have been promising a program along those lines since 1997 — a promise that took center stage in their 2019 reelection campaign.

An Angus Reid poll from 2015 found the pharmacare policy to be overwhelmingly popular: 91 percent of Canadians support a universal, national plan. As the Canadian Health Coalition observes, Canada is the only country in the world with a public health care system that doesn’t cover prescription drugs: nearly one in four Canadians struggle to afford to fill their scripts.

The Liberals have also shirked meaningful action on Canada’s intensifying housing crisis. Canada is now rated as having one of the worst housing bubbles among other OECD countries, second only to New Zealand. The budget offers $2.5 billion to fund the party’s existing housing plan, which seeks “to build or repair 35,000 units in total.” As CTV News observed, this amounts to little more than a “small dent” in the problem for “more than 1.6 million Canadians who live in inadequate or unaffordable housing.”

The government paired this lean investment with a limp 1 percent tax on the values of foreign-owned properties that are deemed “vacant” or “underused.” With average sale prices rising 31.6 percent year over year, and rents still high despite brief dips during the pandemic, the plan falls woefully short of the intervention necessary for the scale of the crisis.

The budget mostly leaves postsecondary institutions — whose finances have been gutted by the pandemic — to fend for themselves. Laurentian University in Sudbury, for example, is in insolvency negotiations, and has laid off huge swathes of professors and cut almost seventy programs. The Ontario Confederation of University Faculty Associations has been organizing campaigns in support of faculty, calling on governments to save Laurentian, and to fix inadequate funding schemes for the whole sector.

But the Liberals are offering very little by way of substantive support. The party’s gestures fall far short of what’s needed to make postsecondary education functional on a broad scale and save institutions hit hard by the crisis. The government has doubled grants for low-income students — but only temporarily — placing a very small band aid on the glaring problems of skyrocketing tuition and inaccessibility. This piecemeal help is typical of Liberal governments and will be cold comfort to students and faculty alike.

The Ugly

When it comes to climate change, the impoverished nature of the Liberal imagination is most clearly on display. Despite grand pronouncements and commitments to hit emissions targets, the party’s approach is wholly insufficient in addressing the biggest challenge presently facing humanity.

The total size of the package is significant — $17.6 billion — and there will be some spending dedicated to public transit, passenger rail, and clean technology. But the plan is undercut by tax breaks and subsidies for the private sector. Worse yet, it relies heavily on totally useless carbon tax schemes and carbon capture technology.

“The government’s focus,” the Broadbent Institute pointed out, “is much more on carbon pricing than on needed regulations, public investment in clean energy, and a green industrial and trade policy.” As the Monitor observes, “the government is still relying on the private sector to take the necessary steps to get us to net zero.” Banking heavily on tax breaks and incentives, the government is refusing to call for a massive, ambitious transition program — the very thing that is necessary for the fight against climate change.

The Liberals only flirted with significant changes to taxation, and in laughably meager ways: The budget calls for an increase in “luxury” taxes (on items like boats, cars, and planes) and a 3 percent tax on “the revenue of digital giants.” Eighty percent of Canadians support the idea of a wealth tax, but the Liberals opted not to include it in their budget.

Despite all the massive gaps in meaningful spending and the lack of a plan to increase revenues, the Liberals had no problem finding enough money for jets and warships. As the Canadian Foreign Policy Institute points out, “the budget allocates over ten times more to the Department of National Defence than Environment and Climate Change Canada.” It sets aside $95 billion for the procurement of fifteen surface combatant vessels and eighty-eight fighter jets.

They also plan to extend the controversial Canadian Emergency Wage Subsidy (CEWS) program, which has facilitated a staggering conversion of public wealth into private profit. Because of lax language and restrictions, big business often hoovered up the subsidy before it could reach its intended destinations.

Massive corporations like Bell, Rogers, Corus Entertainment, and Imperial Oil are among the many who collected public cash via the CEWS program and continued to pay out dividends, buy back stocks, and/or pay out executive bonuses. In some cases, they still laid workers off. The government will now pour an additional $10.1 billion of budget cash into the program.

The budget also allocates $4 million to finishing the installation-turned-meme Victims of Communism memorial first dreamt up by the Harper government. The Ottawa cenotaph commemorates the names of a variety of unsavory individuals, including fascists.

The relative comfort with which the 2021 budget earmarks public spending reflects broader currents in ruling-class circles globally. Many governments have decided to spend rather than cut their way through the economic and health crisis that the pandemic has brought on. However, those who argue that neoliberalism is now behind us are mistaken.

Austerity, for the moment, appears to have fallen out of vogue. But it is low interest rates and cheap debt that have enabled governments to undertake massive spending plans and stimulate the economy — not a shift in the balance of power in our society.

Higher taxes levied on the rich, generous funding to permanent social programs, and increases in social spending are all positive, but we should view them with a healthy dose of skepticism. Without intensified class struggle actively winning concessions from capital, our rulers can take back the nice perks they have doled out in liberal democracies just as quickly as they dispense them.

The political terrain will surely change when interest rates eventually rise, and national debt is politically costly. These shifts will tie the hands of well-meaning Liberal MPs who will have no choice but to resort to business as usual, and attack social programs and the poor.

The 2021 budget, then, fits neatly into this present, shaky moment of detente. The project of socialists and labor is to take advantage of the government’s austerity holiday and push to fill the budget’s gaps in addressing our needs. In other words, the song remains the same: We must continue building a long-term alternative that fundamentally reshapes the balance of social power and be ready for the crisis that is probably just around the corner.