EDITOR’S NOTE: This article originally appeared on The Trillium, a Village Media website devoted to covering provincial politics at Queen’s Park.
While Prime Minister Justin Trudeau and Ontario Premier Doug Ford are focused on solving some of the same problems, the federal government’s 2024 budget shows it’s interested in different kinds of solutions.
The 2024 budget federal Finance Minister Chrystia Freeland tabled Tuesday focuses on Canada’s housing affordability crisis. Finding an affordable home has become a key challenge for Trudeau’s Liberals, as it has for Ford’s PCs.
But the new federal measures aren’t likely to mend fences between the two governments.
A key new budget measure is a $6 billion Canada Housing Infrastructure Fund to help pay for water, wastewater, stormwater and other systems that housing developments rely on. To access this funding, provinces will have to meet certain requirements, including legalizing as-of-right fourplexes, which Ford’s government has so far resisted.
If they refuse, the funding will go directly to municipalities. While Ford is seeking a compromise that involves the province, the budget included no indication that one is on the table.
Nor did it include any new funding for any of the priority infrastructure projects the Ontario PC government had asked for.
Ford wrote an open letter to Trudeau on March 14 asking the federal government to earmark $1 billion to build roads to the Ring of Fire, to cover “at least half” of the more than $6 billion cost Metrolinx has affixed to the GO transit expansion to Milton that the PCs envision, and to increase funding for four rail projects in Toronto that the federal government agreed to cover 40 per cent of in 2021.
The Ring of Fire is a region 500 kilometres north of Thunder Bay that’s thousands of square kilometres in size. The governments of Ontario and Canada both believe deposits of minerals like chromite, cobalt, nickel, copper and platinum in the area could serve a vital role in supporting electric vehicle production in the province. There’s currently no all-season road connecting the Ring of Fire to southern Ontario. Ford’s PCs have committed $1 billion towards building one.
Although the federal government’s 2024 budget doesn’t include funding for a road to the Ring of Fire, it does contain promises that could affect an attempt to access and extract the region’s minerals. It proposes to amend the Impact Assessment Act in response to an October 2023 Supreme Court decision that ruled parts of it unconstitutional and to “set a target of five years or less” for a federal impact assessment — which several road projects proposed in the Ring of Fire are going through.
The Trudeau government’s budget also promises to improve and advance consultation processes with Indigenous communities. The Ford government has been trying to win First Nations’ support for opening up the Ring of Fire. First Nations in the area are also expected to play a key role in the regional impact assessment.
On Monday, a day before the federal government unveiled its budget, Ford held a media event in Milton to “keep urging the federal government to join us in a true cost-sharing partnership to build a fully separated passenger rail line so we can finally make two-way all-day GO train service a reality … in Milton.” A byelection for the provincial riding of Milton will be held on May 2 to replace Parm Gill. Earlier this year, Gill resigned from Ford’s cabinet and as a PC MPP to run federally for Pierre Poilievre’s Conservatives.
The Ontario Line, Eglinton Crosstown West Extension, Yonge North Subway Extension, and Scarborough Subway Extension were the four rail projects the Trudeau government promised $10.4 billion in total funding towards in 2021. In his March 14 letter to Trudeau, Ford blamed the federal government for creating “the inflationary environment” that has caused the cost estimates for the projects to increase.
“It is only fair that you help these new pressures,” Ford wrote to no avail, at least from the federal Liberals’ 2024 spending plan.
The Trudeau government’s budget did not add any new funding to its Investing in Canada Infrastructure Program or the Canada Community-Building Fund — the federal government’s main infrastructure-funding stream. The federal government plans to spend a combined $56.1 billion on infrastructure projects through the two programs over the next decade, including $20.3 billion on projects in Ontario.
Commitments in the federal government’s budget related to transit were instead geared toward maintaining VIA Rail’s service while continuing to work towards its plan to create high-frequency rail transit between Toronto and Quebec City.
Hours before federal budget day, Ford’s PCs did secure a win from the Trudeau government on a different infrastructure project: Highway 413. The two governments announced on Monday evening that they signed an agreement to allow the 52-kilometre provincial highway project to proceed while they work together on how to minimize its environmental impacts.
Also on Monday, Ontario Finance Minister Peter Bethlenfalvy gave advice to the federal government: “don’t raise taxes, (instead) cut taxes, (and) make it easier for easier for companies to invest in, and workers to work in, the economy here in Ontario.”
However, the Trudeau government’s 2024 budget proposes several tax changes, with the most significant aspect of the “improving tax fairness” portion of its budget being targeted at the highest-earning Canadians. The federal Liberals are proposing to increase the highest capital gains tax rate.
The capital gains tax rate in Canada is currently 50 per cent. Individuals must pay this tax when they generate income from selling assets like stocks. Certain incomes are exempt from the capital gains tax, like most cases of someone selling their principal residence, or when they earn income in an RRSP, TFSA, or registered pension plan.
The federal government’s budget proposes increasing the tax rate on capital gains realized above $250,000 from 50 per cent to two-thirds, including for corporations and trusts, while expanding some existing exemptions to limit the impact on certain small business operators.
Documents provided by the Department of Finance say the proposed changes would only affect “the wealthiest 0.13 per cent” of Canadians, and that it’s “not expected to hurt Canada’s business competitiveness.” The budget projects the changes would generate $19.4 billion in revenue for the federal government over the next five years.
One newly proposed federal tax measure that could benefit the Ford government is a new EV Supply Chain Investment Tax Credit. Electric vehicle makers will qualify for a 10 per cent tax credit on the cost of buildings they use if they’re involved in EV assembly, battery-making, and the production of cathode active material — a key EV battery component.
The Trudeau government’s 2024 budget confirmed it’ll continue to stand by the carbon tax that several premiers, including Ford, have repeatedly asked it to axe. But it is proposing a slight change to its carbon pricing system by looking to also send rebates to small- and medium-sized businesses. Rebates of 90 per cent of carbon tax charges have been returned to Canadians since the federal Liberals introduced it in 2019. Their 2024 budget proposes ongoing returns to businesses with 499 or fewer employees, beginning with the distribution of an estimated $2.5 billion to 600,000 businesses, based on amounts collected since 2019-20.
The 2024 budget projects a federal deficit of $39.8 billion in 2024-25 and declining deficits toward 2028-29, a year that the federal government projects to be $20 billion in the red.
Editor's note: A previous version of this story said the Ring of Fire is going through a federal impact assessment. It has been clarified to state that several Ring of Fire road projects are going through impact assessments.