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As governments across Canada tabled their 2024 budgets, you will have caught the blaring headlines on more spending, historic deficits, higher rebates, and even higher taxes. But what details from these complex documents didn’t make the news?  

StrategyCorp drilled into the budgets of Alberta, Ontario, Quebec and the federal government for the less-publicized details you need to know. 

 

WHAT WE’RE TRACKING

FEDERAL: LEAPS FOR CAPITAL GAINS TAX, SMALL STEPS FOR PRODUCTIVITY 

The federal budget heightened concerns over Canada’s productivity, with the business community warning that hiking capital gains tax changes would contribute to the country’s productivity and investment woes. 

But with housing and the capital gains issues looming large in Budget 2024, a few small but targeted measures to address productive and support businesses went relatively unnoticed.  

The budget proposes an additional $158.5 million in the Regional Economic Growth through Innovation program that businesses can access to scale up, implement new technologies, improve productivity and find new markets.  

And to help drive investment in capital, businesses would be able to immediately write off the full cost of investments in patents, data network infrastructure equipment, computers and other data processing equipment. The measure carries an estimated price tag of $725 million over five years. 

ONTARIO: DON’T AXE THE VACANT HOME TAX 

As the Ontario government continues to look for ways to increase housing supply, the “Build Ontario” 2024 Budget is now allowing all municipalities beyond just Ottawa, Toronto and Hamilton to levy a vacant home tax (VHT).  

The government also plans to strengthen the Non-Resident Speculation Tax. The concept is to penalize owners for not renting, selling or redeveloping residential properties sitting empty while Ontario faces a housing shortage.  

But the rollout of the VHT hasn’t been straightforward, with complaints in Ottawa and a public-relations nightmare in Toronto where at least as 110,000 homeowners appear to have been erroneously taxed. It’s a good thing, then, that the province has also rolled out a policy framework that sets out best practices for implementing the vacant home tax.  

On a more family-friendly note, the Ontario budget also includes $200 million to support the construction and upgrade of sports and recreation facilities – good-news, ribbon-cutting opportunities that signal the Ford government may already be thinking about the 2026 election. This application-based program will be open to municipalities, Indigenous communities and non-profit organizations. 

QUEBEC: DEFICIT DETAILS BRIGHTEN PICTURE 

The $11 billion deficit projected for 2024-2025 dominated the coverage of Quebec Budget 2024. However, the math behind this large deficit went relatively unnoticed. The $11 billion includes a $2.2-billion transfer to the Generations Fund as well as a $1.5-billion contingency reserve.  

That means the pure “operational” deficit is closer to $7 billion or roughly what it was in 2014 before the return to balance. 

Also worth mentioning is the fact that the forecasted debt servicing as a proportion of revenue is 6.7 per cent – lower than the historic 9-10 per cent range seen in the 2000-2015 period. 

However, while the $11 billion deficit is below two per cent of gross domestic product (GDP), the budget’s GDP growth forecast for this year (+0.6 per cent) is more optimistic than what the private sector anticipates (0.3-0.4 per cent).  

The trajectory of Quebec’s deficit and debt will be closely watched by credit rating agencies. 

ALBERTA: ENERGY, YES. BUT ECONOMIC DIVERSIFICATION TOO 

Alberta Premier Danielle Smith is not one to shy away from defending the oil and gas sector or its role in the provincial and national economy. And no wonder – energy royalties bring in millions of dollars in revenues, which helps the province balance its budgets. 

Premier Smith and the UCP have had a tense relationship with the federal level ever since she came into power (remember the Alberta Sovereignty within a United Canada Act?). Following a “More Alberta, Less Ottawa” approach, the province is trying to shift as much decision-making power as possible from the federal government. In many ways, this is reminiscent of Quebec’s approach to federalism in several policy areas. 

What often gets lost about Alberta is that the government is fully aware of the need to get off “booms and busts” cycles to not only rely on energy.  

This is why Budget 2024 continued the push for economic diversification. It proposed to spend $22 million on the Alberta Technology and Innovation Strategy with a focus on emerging tech and commercialization. Alberta also wants to improve innovators’ access to venture capital investments. The budget highlighted sectors Alberta wants to grow and stimulate investments, including fintech, aerospace, aviation, logistics and even film and television. 

THE NUMBERS: SLOW GROWTH AND HIGHER DEFICIT FORECASTS DOMINATED BUDGET SEASON 

As high interest rates continue to slow economic activity, federal and provincial budgets forecasted limited growth and higher unemployment for 2024. Only Alberta (+2.9 per cent), Prince Edward Island (+4.1 per cent) and Newfoundland and Labrador (+5.1 per cent) expect to see their real GDP increase by more than two per cent.  

The Ontario budget has the most pessimistic economic projections with a mere 0.3 per cent of real GDP growth and the highest unemployment rate among non-Atlantic provinces (6.7 per cent). 

On the fiscal side, budget season saw a lot of red ink. The federal budget shows a $39.8 billion deficit for 2024-2025. Provincially, only Alberta and New Brunswick expect to record surpluses. 

CANADA’S DEFENCE POLICY UPDATE

The Department of National Defence has released a defense policy update (DPU): Our North, Strong and Free: A Renewed Visions for Canada’s Defence.

This DPU was ordered in the wake of Russia’s invasion of Ukraine when the governments of liberal democracies around the world were shocked that war had returned to Europe creating the imperative for self-assessment of current capacity and a strategic plan for future readiness and deterrence. Read our full analysis.