Budget 2022: Housing supply gets $10B boost; Budget makes good on dental care, but little in new health spending

The federal Liberal government is promising $500 million in additional military aid to Ukraine as well as more humanitarian and financial support to Kyiv in response to Russia’s invasion.

The commitments are contained in today’s federal budget and follow previous promises from Prime Minister Justin Trudeau and other ministers that Canada is looking at sending more weapons and other assistance to Ukraine.

Finance Minister Chrystia Freeland says while Canada and its allies have sanctioned Russia over its invasion, recent allegations of Russian war crimes show the Ukrainians need more help.

The budget doesn’t say how the newly promised military aid will be delivered.

Trudeau and Defence Minister Anita Anand have said Canada is looking at buying weapons on the open market for Ukraine, while a group of Ukrainian legislators last week asked the government to provide money so Kyiv can buy arms itself.

The budget says Canada is also offering an additional $1 billion in loans to Ukraine through a special account managed by the International Monetary Fund, which is in addition to $620 million in loans already offered.

The federal Liberal government hopes to ease the housing crisis with more than $10 billion in funding meant to speed up home construction and repairs.

The commitments are part of a raft of promises in the federal budget unveiled Thursday that also include a two-year ban on foreign investors buying homes and tax measures meant to reduce speculation.

Increasing housing supply is the clear focus of the spending commitments, which include $4 billion for municipalities as part of a housing accelerator fund, $1.5 billion for affordable housing and $4.3 billion for Indigenous housing.

The Liberals say they will also leverage more than $40 billion in infrastructure funding to push cities and provinces to act faster on housing.

To tamp down on speculation and demand, the Liberals have also proposed a two-year ban on foreign home buying as well as higher taxes for people who sell their home within a year, though both measures include multiple exceptions.

The budget also includes measures to help people trying to get into the market, including a new savings account and changes to the first-time home buyers tax credit.

Ottawa says it will spend $4.3 billion over seven years to help improve Indigenous housing.

Investing more this year in housing for Indigenous Peoples is a priority in the agreement the federal minority Liberal government struck with the New Democrats last month, as well as in Prime Minister Justin Trudeau’s re-election platform last year.

Expectations were high and the Assembly of First Nations alone had asked to see $44 billion in the budget to address current housing needs, which include issues around repairs and overcrowding.

The 2022 spending plan released today gives $4 billion — including $652 million this fiscal year — to Indigenous Services Canada and Crown-Indigenous Relations and Northern Affairs to speed up work on the issue, including $2.4 billion for on-reserve housing.

The budget also fulfils a Liberal campaign pledge to put $300 million over five years toward building an urban, rural and northern Indigenous housing strategy.

The government is also preparing to spend about $210 million more over five years on helping communities contend with the harmful past of residential schools, including searching for unmarked graves and making sure the federal government hands over related documents.

The Trudeau Liberals are promising to create two new arm’s-length bodies to handle billions in federal funds to prod businesses to invest in themselves.

The measures unveiled in the 2022 federal budget would see $15 billion over five years put into a fund designed to alleviate risks for private companies to make it more palatable to spend on research and technology.

The cash for what the Liberals call the "Canada Growth Fund" will come through existing dollars baked into the government’s fiscal framework.

Money would go to companies through loans and equity stakes that the government expects to largely earn back, although some of it may ultimately not flow back to federal coffers.

The fund would be set up over the next year with the first investments expected in the ensuing 12-month period under the projections set out in the budget.

The fund and a sister agency to help commercialize new discoveries add to the handful of arm’s-length agencies the Liberals have created over the years, which experts say have a mixed track record.

The Liberals have made good on promises to the NDP when it comes to health spending in their newly released budget, but offered little else in new spending to reinvigorate Canada’s struggling health system.

The government expects to launch a new dental program in 2022, starting with children under the age of 12 at an initial cost of $300 million.

The scheme laid out in the budget is a major tenet of the Liberal’s confidence and supply agreement with the NDP to keep the government in power until 2025. The budget closely mirrors the opposition party’s costed platform proposal from the 2021 election, though details about how it will work are still sparse.

The new program will be restricted to families with an income of less than $90,000, with no co-pays for those who make under $70,000 per year.

The plan is to expand eligibility to children under the age of 18, seniors and persons with disabilities in 2023. The government expects full implementation by 2025, with an annual cost of $1.7 billion.

In total, the government expects to spend $5.3 billion over five years on dental care.

The Liberals also committed to passing a legislative framework for a national pharmacare plan by the end of 2023 as part of their deal with the NDP, but did not set aside any funds for the program in the budget.

While the government contemplates adding to public health care, provinces and health workers have warned the existing system is crumbling and in desperate need of help.

Provinces have clamoured for the federal government to increase its share of health spending, with an immediate increase of about $28 billion, to shore up their struggling systems.

Health transfers to the provinces will increase in 2022, but not nearly to the degree provinces have asked for.

They want minimum funding increases of five per cent annually, arguing the current plan of three per cent jumps in spending means transfers don't keep pace with yearly cost increases.

Currently, federal contributions to provincial health systems grow in line with a three-year moving average of nominal gross domestic product. Thanks to a sunnier economic outlook than expected, the transfers will rise by about 4.8 per cent.

Health Minister Jean-Yves Duclos previously announced a $2 billion one-time boost for provincial health systems to work through the massive surgical backlogs that accumulated during the COVID-19 pandemic.

In the budget, the government alludes to the possibility of further negotiations on health transfers, but says that money would have to be tied to government priorities like increased access to primary and mental health care.

The budget does not appear to respond to the near-frantic pleas from health workers for a plan to address a serious staff shortage, as burnt-out employees reduce their hours and leave the industry in droves.

The only new measures involve expanding loan forgiveness for doctors, nurses and other health professionals in rural and remote communities, as well as making it easier for foreign trained professionals to be certified in Canada.

The budget also included funds to "finish the fight" against COVID-19, with $50 million in 2022 to finance the purchase of vaccines, tests and therapeutics, $50 million to maintain Canada’s emergency stockpile of critical health supplies, $18 million to maintain vaccine passports for one more year and $25 million to maintain the ArriveCan app to track public health information for travellers.

The Public Health Agency of Canada will also get a $436 million boost over the next five years to track and assess the risk of viruses, flu and respiratory infections.

The government appears keen to wind down COVID-19 health spending beyond 2022, but has set aside $20 million to study the long-term impact of the virus on infected Canadians and Canada’s health care systems.

The federal Liberal government is promising more than $8 billion in new spending on Canada’s military over the next five years, though most won’t materialize for some time and exactly what that money will buy isn’t clear.

The new federal budget also promises a fresh review of the country’s military priorities and plans as Canada and its allies face growing threats from Russia and elsewhere.

Canada has been under pressure to follow other members of the NATO military alliance and spend more on its military in the wake of Russia’s invasion of Ukraine, with members urged to dedicate two per cent of their GDP to defence.

While the injection of new military spending will be welcome, most of the money isn’t earmarked to be spent until later years and the budget doesn’t say what the majority will be spent on.

Nor does it say how the new funds will affect defence spending as a share of GDP, though a senior Finance official, speaking at a media briefing held on condition of anonymity, said Canada will eventually hit the 1.5 per cent mark.

The official also said specific allocations for modernizing North America’s defences and bolstering Canada’s support to the NATO military alliance will be determined later, likely after the policy review.