The 2024 Canadian Federal Budget is just around the corner, with Deputy Prime Minister and Finance Minister Chrystia Freeland announcing that the new budget will be released on April 16^th. This leaves us with much to speculate about, as the government has not been transparent about changes coming down the pipeline. However, some various indicators and reports provide insight into the potential priorities and shifts the government might announce. Drawing from recent articles and announcements, this discussion paper aims to forecast potential budgetary focuses, particularly in light of shifting governmental priorities and public sentiment. Of course, this paper is only speculative and predictive, so take it with a grain of salt. We won’t know the full extent of the government’s plans until we can get our hands on the actual budget.

Shift Towards Solving the Housing and Cost-of-Living Crisis.

According to recent reports from the finance minister herself, the federal government appears inclined to reorient its focus towards housing, saying, “Our economic plan is about building more homes faster” and adding that the new budget aims at “making life more affordable and creating more good jobs.”[1] This seems to be a significant shift away from the mass support of small and medium businesses that we saw during the pandemic and, at least on paper, a meaningful acknowledgement of the need to tackle the growing housing crisis in Canada.

Freeland also signalled the need to address Canada’s rising cost of living situation. Freeland indicated that the new budget would “unlock pathways to a good middle-class life for the next generation” and recognized that “the single most significant thing in a family’s budget is paying your mortgage or the rent.”[2] Housing affordability has become a pressing concern for Canadians, particularly in major urban centers where skyrocketing prices have left homeownership out of reach for many. In response, the federal government may announce significant investments in affordable housing initiatives, such as funding for the construction of new units, incentives for developers, and support for first-time homebuyers just as it has done in the past few months, now, of course, the difference would be the addition of dedicated funds taken out of a much larger pot.

Shifting Away from SME’s

Among the noise at the top level, there have also been rumblings lower down that could signal changes coming down the line. The Department of Innovation, Science, and Economic Development (ISED), for example, has potentially signalled a move away from supporting small and medium-sized enterprises (SMEs), opting towards a more industrial-centred approach, with commitments to bolster EV-battery manufacturing, biomanufacturing, and digital infrastructure and literacy across Canada.[3] This could result from recent announcements concerning budget cuts to the department or could be signalling the government is aiming to move away from small business development into avenues that will provide more significant growth opportunities over time.[4]

After all, entrepreneurship and start-ups in Canada are on a rocky footing, with a sharp decline in both as a robust labour market and relatively stable employment trumps the risks that come with entrepreneurship. The SME market is seeing hit after hit with retiring business owners without succession plans, educational shortcomings in instilling an entrepreneurial mindset, and increasing competition with the United States for entrepreneurial talent.[5] While the obvious solution would be for Canada to invest in small enterprises and entrepreneurs through education, supporting immigrant entrepreneurs, and enhancing innovation ecosystem funding to foster a conducive environment for entrepreneurial success and economic growth, they seem to gut it all and take up shop somewhere else.

Given the government’s apparent shift in focus, it is conceivable that support for SMEs may experience a decline. Instead, the budget might prioritize initiatives to address housing issues and alleviate the cost-of-living crisis by directly injecting capital and subsidies to municipalities and Canadian citizens. While SMEs may still benefit indirectly from specific budgetary measures, such as investments in infrastructure and innovation, the emphasis on larger companies in critical sectors suggests a revaluation of support mechanisms for smaller enterprises.

Impact on Defense

Defence spending is another area likely to receive attention, especially in light of geopolitical tensions, the need to modernize Canada’s armed forces, and the uproar over proposed cuts. And as Canadian NATO allies begin to criticize the government for its lack of commitment to the 2% target, it may be time for the budget to be amended. The government may allocate funds to acquire new military equipment, enhance cybersecurity capabilities, and increase troop numbers to address emerging threats. Investments in defence infrastructure and research and development initiatives could also be prioritized to ensure Canada’s security interests are adequately protected. Something that has been signalled is a significant want from the top brass in the Canadian military.[6]

Conclusion

In summary, while specific details regarding reallocated funds and budgetary details remain unclear, insights from recent reports and comments made by the finance minister offer valuable clues regarding the government’s likely priorities for the 2024 Federal Budget. The anticipated focus on housing, defence, and addressing the cost of living reflects ongoing challenges facing Canadian society and the doubling down of recent commitments made by the government alongside budgetary consultations. I will reiterate that this is only speculation based on recent grumblings in the media and my understanding of the country’s current state overall.

Bibliography

Brewster, Murray. “Federal Government Looking to Cut $1 Billion from National Defence Budget | CBC News.” CBC News, September 29, 2023. https://www.cbc.ca/news/politics/department-national-defence-budget-billion-1.6981974.

Coull, Jeff. “Why Canadian Entrepreneurship Is in Decline and How to Revive It.” TheFutureEconomy.ca, February 16, 2024. https://thefutureeconomy.ca/op-eds/canadian-entrepreneurship-jeff-coull-northwestern-ontario-innovation-centre/.

Dunne, James. “Can More Dreamers Become Doers? Fixing Canada’s Entrepreneur Shortage | CBC News.” CBC News, October 20, 2023. https://www.cbc.ca/news/business/canada-entrepreneurs-shortage-solutions-1.7002171.

Hammadi, Murad. “Ottawa Guts Innovative Solutions Canada Amid Spending Review.” The Logic, March 4, 2024. https://thelogic.co/news/ottawa-guts-innovative-solutions-canada-amid-spending-review/.

Innovation, Science and Economic Development Canada’s 2024–2025 Departmental Plan at a Glance (2024). https://ised-isde.canada.ca/site/planning-performance-reporting/en/departmental-plans/innovation-science-and-economic-development-canadas-2024-2025-departmental-plan.

MacDonald, Brennan. “Canada Needs a ‘Concrete Plan’ to Hit NATO Defence Spending Pledge, Says U.S. NATO Envoy | CBC News.” CBC News, February 22, 2024. https://www.cbc.ca/news/politics/us-canada-plan-nato-defence-spending-1.7122416#:~:text=In%20an%20interview%20with%20Power%20%26%20Politics%2C%20U.S.%20Permanent%20Representative%20to,cent%20of%20GDP%20by%202024.

Tasker, John Paul. “Chrystia Freeland to Present Federal Budget on April 16 | CBC News.” CBC News, March 4, 2024. https://www.cbc.ca/news/politics/federal-budget-april-16-2024-1.7132999.

[1] John Paul Tasker, “Chrystia Freeland to Present Federal Budget on April 16 | CBC News,” CBC News, March 4, 2024, https://www.cbc.ca/news/politics/federal-budget-april-16-2024-1.7132999.

[2] Ibid.

[3] Innovation, Science and Economic Development Canada’s 2024–2025 Departmental plan at a glance § (2024), https://ised-isde.canada.ca/site/planning-performance-reporting/en/departmental-plans/innovation-science-and-economic-development-canadas-2024-2025-departmental-plan.

[4] Murad Hemmadi, “Ottawa Guts Innovative Solutions Canada Amid Spending Review,” The Logic, March 4, 2024, https://thelogic.co/news/ottawa-guts-innovative-solutions-canada-amid-spending-review/.

[5] See James Dunne, “Can More Dreamers Become Doers? Fixing Canada’s Entrepreneur Shortage | CBC News,” CBC News, October 20, 2023, https://www.cbc.ca/news/business/canada-entrepreneurs-shortage-solutions-1.7002171; and Jeff Coull, “Why Canadian Entrepreneurship Is in Decline and How to Revive It,” TheFutureEconomy.ca, February 16, 2024, https://thefutureeconomy.ca/op-eds/canadian-entrepreneurship-jeff-coull-northwestern-ontario-innovation-centre/; for more in-depth analysis into the current Canadian Entrepreneurship landscape.

[6] See Murray Brewster, “Federal Government Looking to Cut $1 Billion from National Defence Budget | CBC News,” CBC News, September 29, 2023, https://www.cbc.ca/news/politics/department-national-defence-budget-billion-1.6981974; and Brennan MacDonald, “Canada Needs a ‘concrete Plan’ to Hit NATO Defence Spending Pledge, Says U.S. NATO Envoy | CBC News,” CBC News, February 22, 2024, https://www.cbc.ca/news/politics/us-canada-plan-nato-defence-spending-1.7122416#:~:text=In%20an%20interview%20with%20Power%20%26%20Politics%2C%20U.S.%20Permanent%20Representative%20to,cent%20of%20GDP%20by%202024.