Finance Minister Chrystia Freeland‘s fourth budget delivers a big-ticket housing program for millennials and Generation Z voters — a multi-billion dollar commitment to be paid for in part with a tax hike on the rich and corporate Canada.
Freeland’s document calls for about $52.9 billion in new spending over the next five years — a significant jump over what Ottawa had said it would spend in the fall economic statement released just a few months ago.
To offset some of that new spending, Freeland is pitching policy changes the government says will generate roughly $21.9 billion in new revenue. That money is to come in part from higher capital gains taxes and a hike to excise taxes on cigarettes and vaping products.
“We are making Canada’s tax system more fair by ensuring that the very wealthiest pay their fair share,” Freeland said Tuesday after tabling her budget in Parliament.
“We are doing this because a fair chance to build a good, middle class life — to do as well as your parents, and grandparents, or better — has always been the promise of Canada.”
The result is a projected budget deficit of about $40 billion in the 2024-25 fiscal year — roughly what Freeland had predicted.
While the government is spending more overall, it says that better-than-expected economic growth and higher taxes will keep the deficit under control.
The Liberal government’s preferred “fiscal anchor” — the budget benchmark that guides its decisions — has long been to keep the net debt-to-GDP ratio on a declining trend, with debt levels closely tracking the overall size of the economy.
The budget document says the government must meet that benchmark in the years ahead to retain Canada’s triple-A credit rating.
Debt charges soar
Deficits eventually roll over into long-term debt. The cost to finance Canada’s growing debt pile — which has more than doubled over the last nine years to $1.4 trillion — is eating up more and more taxpayer dollars as the government is forced to refinance its borrowing at higher rates.
Public debt charges will cost $2 billion more this year than the forecast in November as the Bank of Canada keeps rates relatively high to tame inflation — which has shown signs of slowing down.
With interest rates at a 20-year high, Ottawa’s cost to borrow has spiked from $20.3 billion in 2020-21 to $54.1 billion in 2024-25.
That means Ottawa will spend more to service its debt than it will on health care this year — and the debt charges will march even higher in the years ahead.
Carrying the debt is expected to cost the federal treasury $64.3 billion in 2028-29 — more than double what Ottawa sends to the provinces through equalization payments.
“The interest rates are hurting the government just as much as they’re hurting us consumers,” said Sahir Khan, a former deputy parliamentary budget officer and the executive vice-president of the uOttawa Institute of Fiscal Studies and Democracy.
“It’s now a meaningful amount relative to other spending pressures and it’s going to start squeezing other programs. The government built up a stock of debt subject to prevailing interest rates and that creates a risk.”
Billions more for housing
The budget allocates $8.5 billion more to housing to help alleviate a crisis that has locked a generation of young people out of the dream of home ownership. The government maintains its housing measures will drive the creation of roughly four million more homes by 2031.
New investment to lead ‘housing revolution in Canada,’ Freeland says
Finance Minister and Deputy Prime Minister Chrystia Freeland said this year’s federal budget will pave the way for Canada to build more homes at a pace not seen since the Second World War. The new investment and changes to funding models will also cut through red tape and break down zoning barriers for people who want to build homes faster, she said
“We are moving with purpose to help build more homes, faster. We are making life cost less,” Freeland said. “Millennial and Gen Z Canadians, we want them to look forward to the future with a sense of anticipation, not angst.”
A man wears a cardboard house on his head during a demonstration calling for more affordable housing and social housing in Montreal. (Graham Hughes/The Canadian Press)
The government also has committed to maintaining the already well-subscribed tax-free savings account, extending mortgage amortization terms and increasing the RRSP withdrawal limit for some first-home buyers, among other measures.
The housing program is a “home run,” said Armine Yalnizyan, a progressive economist and the Atkinson Fellow on the Future of Workers.
Yalnizyan said Conservative Leader Pierre Poilievre’s early focus on housing hurt the Liberals’ standing among some millennial voters.
Now, the Liberals are trying to reclaim some of those votes with an ambitious program which, if it’s carried out as planned, will meaningfully increase the country’s housing supply, she said.
“It’s really an attempt to stop the Conservatives from eating their lunch,” she said.
A tax hike on the rich
As Ottawa moves to remake the housing landscape, roll out a national dental care program and launch pharmacare, Freeland’s budget includes a number of targeted tax hikes that it says will yield some $21.9 billion in new revenue over the next five years.
The biggest windfall will come from an increase to the capital gains inclusion rate.
Under the current regime, only 50 per cent of capital gains are taxable. If a taxpayer sells an asset like a cottage, an investment property, a stock or mutual fund for $100,000 more than they paid, they are taxed only on $50,000 of that profit.
With this new budget, the “inclusion rate” will increase from one-half to two-thirds on capital gains above $250,000 per year for individuals, and on all capital gains realized by corporations and trusts.
The move is likely to be seen by business-friendly groups as an attack on the people and businesses that create jobs.
Freeland said she anticipates some blowback.
“I know there will be many voices raised in protest. No one likes paying more tax, even — or perhaps particularly — those who can afford it the most,” she said.
“Tax policy is not only, or chiefly, the province of accountants or economists. It belongs to all of us because it is how we decide what kind of country we want to live in and what kind of country we want to build.”
New Democratic Party Leader Jagmeet Singh has been pushing for higher taxes on the wealthy. (Adrian Wyld/The Canadian Press)
The NDP — the government’s partner in the supply-and-confidence agreement — likely will welcome the change; party leader Jagmeet Singh has said the wealthy and big corporations should shoulder more of the country’s tax burden.
“We are asking the wealthiest Canadians to contribute a bit more, so that we can make investments to ensure a fair chance for every generation,” the budget document says. “Canada’s tax system can be more fair.”
The change will not apply to any capital gains from the sale of a primary residence. Investment income earned in an RRSP or TFSA, including capital gains, also will not be taxed.
According to government data, only 0.13 per cent of Canadians — people with an average income of about $1.4 million a year — are expected to pay more in personal income tax on their capital gains as a result of this change.
Jimmy Jean, an economist at Desjardins who tracks Ottawa’s spending, said the federal government’s goal of collecting about $19 billion from the capital gains measure may be difficult to achieve.
“The jury’s out on whether they can get that much,” Jean said.
“Targeting the income and wealth of the wealthy — it’s difficult because it’s more mobile, they can move it around. I’m skeptical.”
Other new revenue-generating measures in the budget include a promise to crack down on bankruptcy fraud and tackle “aggressive tax planning schemes.”
Beyond housing, there’s also a promise to top up the incentives for zero-emission vehicles, deliver a new carbon tax rebate for small businesses, stand up an $800-million energy efficiency retrofit program, increase student grants, create a $500-million fund for youth mental health, launch a $6 billion Canada Disability Benefit, fund a $1 billion national school food program and deliver a $900-million top-up to the Indigenous infrastructure program.
CBC/Radio-Canada will get a one-off $42 million budget boost for news and entertainment programming — a cash injection that will help the company avoid some of the previously announced layoffs.
VIA Rail Canada stands to gain about $400 million over the next few years to turn the dream of high-frequency rail in central Canada into a reality.
What’s in the new federal budget?
CBC News breaks down the biggest items in the new federal budget — and how the government is planning to pay for billions in new spending.
Poilievre blasts budget, Singh stays noncommittal
Poilievre pilloried the budget and said his party would vote against it.
Speaking in the House of Commons, the Conservative leader said the Liberal government has never presented a balanced budget in all the years it’s been in office and the promised $40 billion in new spending will drive inflation higher.
“This is the ninth deficit. The ninth deficit after the prime minister promised the budget would balance itself and what did he do with the money? Everything he spent it on has become more expensive,” Poilievre said.
“This is like a pyromaniac spraying gas on the inflationary fire that he lit. It is getting too hot and too expensive for Canadians and that’s why we need a carbon tax election to replace him with a common sense Conservative government.”
Conservative leader rises in House of Commons to reject Liberal budget
Responding to Tuesday’s budget by the federal Liberals, opposition Leader Pierre Poilievre says Conservatives will vote against the financial plan, and renewed his call for ‘a carbon tax election’ to replace Prime Minister Justin Trudeau.
Singh, meanwhile, said it’s too early to say if his party will support the budget.
While he praised some measures he said his party forced the government to include, such as dental care, pharmacare and a national school food program, Singh said he wants to meet with Trudeau to raise some other “concerns” before making a final decision.
Singh said he’s not onside with a plan to cut about 5,000 public servants through attrition — the federal bureaucracy has grown to about 357,247 workers under Trudeau — and he said there’s inadequate funding for Indigenous peoples.
Liberals ‘ignored opportunity’ in budget to tackle corporate greed, NDP says
NDP Leader Jagmeet Singh says while he is glad to see some measures in the 2024 budget like protections for renters and the national school food program, he believes the Liberals could have done more to bring grocery, internet and housing prices down.
If Singh and his NDP MPs withhold their votes, the minority government could lose the confidence of the House of Commons, tipping the country into an early election.
While the capital gains tax increase will cost the country’s big businesses billions more than what they pay now, Singh said “the Liberals ignored the opportunity to take on corporate greed.”
Singh said the companies he blames for inflation — grocery store chains, telecommunications companies and “housing and corporate landlords” — should have faced tax hikes.
Green Party Leader Elizabeth May said her caucus will vote against Freeland’s budget.
She said the government’s planned disability benefit, which amounts to about $200 a month for eligible Canadians, is too low.
May also said there’s not enough money earmarked for social housing — just more loans for developers to build more affordable homes.
“The budget falls far short of our hopes,” May said. “It’s not meeting the moment. We need dramatic, transformative changes to our society to be able to afford the things we need.”
NEW YORK (AP) — The U.S. syphilis epidemic slowed dramatically last year, gonorrhea cases fell and chlamydia cases remained below prepandemic levels, according to federal data released Tuesday.
The numbers represented some good news about sexually transmitted diseases, which experienced some alarming increases in past years due to declining condom use, inadequate sex education, and reduced testing and treatment when the COVID-19 pandemic hit.
Last year, cases of the most infectious stages of syphilis fell 10% from the year before — the first substantial decline in more than two decades. Gonorrhea cases dropped 7%, marking a second straight year of decline and bringing the number below what it was in 2019.
“I’m encouraged, and it’s been a long time since I felt that way” about the nation’s epidemic of sexually transmitted infections, said the CDC’s Dr. Jonathan Mermin. “Something is working.”
More than 2.4 million cases of syphilis, gonorrhea and chlamydia were diagnosed and reported last year — 1.6 million cases of chlamydia, 600,000 of gonorrhea, and more than 209,000 of syphilis.
Syphilis is a particular concern. For centuries, it was a common but feared infection that could deform the body and end in death. New cases plummeted in the U.S. starting in the 1940s when infection-fighting antibiotics became widely available, and they trended down for a half century after that. By 2002, however, cases began rising again, with men who have sex with other men being disproportionately affected.
The new report found cases of syphilis in their early, most infectious stages dropped 13% among gay and bisexual men. It was the first such drop since the agency began reporting data for that group in the mid-2000s.
However, there was a 12% increase in the rate of cases of unknown- or later-stage syphilis — a reflection of people infected years ago.
Cases of syphilis in newborns, passed on from infected mothers, also rose. There were nearly 4,000 cases, including 279 stillbirths and infant deaths.
“This means pregnant women are not being tested often enough,” said Dr. Jeffrey Klausner, a professor of medicine at the University of Southern California.
What caused some of the STD trends to improve? Several experts say one contributor is the growing use of an antibiotic as a “morning-after pill.” Studies have shown that taking doxycycline within 72 hours of unprotected sex cuts the risk of developing syphilis, gonorrhea and chlamydia.
In June, the CDC started recommending doxycycline as a morning-after pill, specifically for gay and bisexual men and transgender women who recently had an STD diagnosis. But health departments and organizations in some cities had been giving the pills to people for a couple years.
Some experts believe that the 2022 mpox outbreak — which mainly hit gay and bisexual men — may have had a lingering effect on sexual behavior in 2023, or at least on people’s willingness to get tested when strange sores appeared.
Another factor may have been an increase in the number of health workers testing people for infections, doing contact tracing and connecting people to treatment. Congress gave $1.2 billion to expand the workforce over five years, including $600 million to states, cities and territories that get STD prevention funding from CDC.
Last year had the “most activity with that funding throughout the U.S.,” said David Harvey, executive director of the National Coalition of STD Directors.
However, Congress ended the funds early as a part of last year’s debt ceiling deal, cutting off $400 million. Some people already have lost their jobs, said a spokeswoman for Harvey’s organization.
Still, Harvey said he had reasons for optimism, including the growing use of doxycycline and a push for at-home STD test kits.
Also, there are reasons to think the next presidential administration could get behind STD prevention. In 2019, then-President Donald Trump announced a campaign to “eliminate” the U.S. HIV epidemic by 2030. (Federal health officials later clarified that the actual goal was a huge reduction in new infections — fewer than 3,000 a year.)
There were nearly 32,000 new HIV infections in 2022, the CDC estimates. But a boost in public health funding for HIV could also also help bring down other sexually transmitted infections, experts said.
“When the government puts in resources, puts in money, we see declines in STDs,” Klausner said.
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The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Science and Educational Media Group. The AP is solely responsible for all content.
WASHINGTON (AP) — Scientists can’t know precisely when a volcano is about to erupt, but they can sometimes pick up telltale signs.
That happened two years ago with the world’s largest active volcano. About two months before Mauna Loa spewed rivers of glowing orange molten lava, geologists detected small earthquakes nearby and other signs, and they warned residents on Hawaii‘s Big Island.
Now a study of the volcano’s lava confirms their timeline for when the molten rock below was on the move.
“Volcanoes are tricky because we don’t get to watch directly what’s happening inside – we have to look for other signs,” said Erik Klemetti Gonzalez, a volcano expert at Denison University, who was not involved in the study.
Upswelling ground and increased earthquake activity near the volcano resulted from magma rising from lower levels of Earth’s crust to fill chambers beneath the volcano, said Kendra Lynn, a research geologist at the Hawaiian Volcano Observatory and co-author of a new study in Nature Communications.
When pressure was high enough, the magma broke through brittle surface rock and became lava – and the eruption began in late November 2022. Later, researchers collected samples of volcanic rock for analysis.
The chemical makeup of certain crystals within the lava indicated that around 70 days before the eruption, large quantities of molten rock had moved from around 1.9 miles (3 kilometers) to 3 miles (5 kilometers) under the summit to a mile (2 kilometers) or less beneath, the study found. This matched the timeline the geologists had observed with other signs.
The last time Mauna Loa erupted was in 1984. Most of the U.S. volcanoes that scientists consider to be active are found in Hawaii, Alaska and the West Coast.
Worldwide, around 585 volcanoes are considered active.
Scientists can’t predict eruptions, but they can make a “forecast,” said Ben Andrews, who heads the global volcano program at the Smithsonian Institution and who was not involved in the study.
Andrews compared volcano forecasts to weather forecasts – informed “probabilities” that an event will occur. And better data about the past behavior of specific volcanos can help researchers finetune forecasts of future activity, experts say.
(asterisk)We can look for similar patterns in the future and expect that there’s a higher probability of conditions for an eruption happening,” said Klemetti Gonzalez.
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The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Science and Educational Media Group. The AP is solely responsible for all content.
Waymo on Tuesday opened its robotaxi service to anyone who wants a ride around Los Angeles, marking another milestone in the evolution of self-driving car technology since the company began as a secret project at Google 15 years ago.
The expansion comes eight months after Waymo began offering rides in Los Angeles to a limited group of passengers chosen from a waiting list that had ballooned to more than 300,000 people. Now, anyone with the Waymo One smartphone app will be able to request a ride around an 80-square-mile (129-square-kilometer) territory spanning the second largest U.S. city.
After Waymo received approval from California regulators to charge for rides 15 months ago, the company initially chose to launch its operations in San Francisco before offering a limited service in Los Angeles.
Before deciding to compete against conventional ride-hailing pioneers Uber and Lyft in California, Waymo unleashed its robotaxis in Phoenix in 2020 and has been steadily extending the reach of its service in that Arizona city ever since.
Driverless rides are proving to be more than just a novelty. Waymo says it now transports more than 50,000 weekly passengers in its robotaxis, a volume of business numbers that helped the company recently raise $5.6 billion from its corporate parent Alphabet and a list of other investors that included venture capital firm Andreesen Horowitz and financial management firm T. Rowe Price.
“Our service has matured quickly and our riders are embracing the many benefits of fully autonomous driving,” Waymo co-CEO Tekedra Mawakana said in a blog post.
Despite its inroads, Waymo is still believed to be losing money. Although Alphabet doesn’t disclose Waymo’s financial results, the robotaxi is a major part of an “Other Bets” division that had suffered an operating loss of $3.3 billion through the first nine months of this year, down from a setback of $4.2 billion at the same time last year.
But Waymo has come a long way since Google began working on self-driving cars in 2009 as part of project “Chauffeur.” Since its 2016 spinoff from Google, Waymo has established itself as the clear leader in a robotaxi industry that’s getting more congested.
Electric auto pioneer Tesla is aiming to launch a rival “Cybercab” service by 2026, although its CEO Elon Musk said he hopes the company can get the required regulatory clearances to operate in Texas and California by next year.
Tesla’s projected timeline for competing against Waymo has been met with skepticism because Musk has made unfulfilled promises about the company’s self-driving car technology for nearly a decade.
Meanwhile, Waymo’s robotaxis have driven more than 20 million fully autonomous miles and provided more than 2 million rides to passengers without encountering a serious accident that resulted in its operations being sidelined.
That safety record is a stark contrast to one of its early rivals, Cruise, a robotaxi service owned by General Motors. Cruise’s California license was suspended last year after one of its driverless cars in San Francisco dragged a jaywalking pedestrian who had been struck by a different car driven by a human.
Cruise is now trying to rebound by joining forces with Uber to make some of its services available next year in U.S. cities that still haven’t been announced. But Waymo also has forged a similar alliance with Uber to dispatch its robotaxi in Atlanta and Austin, Texas next year.
Another robotaxi service, Amazon’s Zoox, is hoping to begin offering driverless rides to the general public in Las Vegas at some point next year before also launching in San Francisco.
