On March 28, the Trudeau Liberal government tabled its 2023-4 budget—the second of its three-year agreement with the New Democratic Party (NDP). All told, in the face of runaway inflation, chronic unemployment, collapsing services, and a looming recession, it offers little for workers but cuts and war—with the support of the NDP.
‘What we could negotiate’
Since 2022, the NDP has propped up the Liberals with a confidence-and-supply agreement. At the time, the NDP pledged to tie its support to its “priorities,” like universal dental care and pharmacare, investments in social housing, and healthcare. Jagmeet Singh himself said: “We always have the right, if the government breaks any conditions of the agreement, if they don’t follow through with what we forced them to agree to, we have then the power or the option of withdrawing our support.”
Yet, during the last budget the Liberals reneged on many of these “priorities,” but the NDP’s support held firm. At the end, Singh could only say: “What we were able to force the government to do is what we could negotiate.”
In the lead up to the 2023-4 budget, things looked no more promising. While the NDP sought a budget that “saves you money and creates good jobs with better wages,” Finance Minister Chrystia Freeland promised Bay Street a “fiscally responsible,” budget—explicitly ruling out any significant measures to “compensate,” workers to help them through the present crisis. As well, the Toronto Star reported in October, Freeland’s office circulated a memo to all federal departments warning them that new program spending would be financed by cuts to other programs or “internal reallocations.
The final budget, as “negotiated,” by the NDP breaks the deal’s priorities around pharmacare, underfunds healthcare and housing, and plans a pivot to new attacks.
No pharmacare
Some may also recall that the original Liberal-NDP deal promised to deliver a pharmacare program. In January, NDP leader Jagmeet Singh even insisted: “We want to see a national framework presented in Parliament, and passed in Parliament before the end of the year.” Yet, the word “pharmacare” does not appear anywhere in the budget’s 338 pages.
Additionally, many others will notice that Canada’s healthcare system is on the edge of collapse. With regular emergency room closures and staffing shortages, crisis has become the norm. Yet, despite Singh’s insistence that the budget marks the “biggest expansion” in Canada’s healthcare system “in a generation” it falls far short of addressing the crisis.
The budget sticks to five per cent annual increases in the Health Transfer, against 5.2 per cent inflation, for the next 10 years. Aside from amounting to a real cut, this is lower than the past six per cent health transfer increases seen even under the Harper Conservatives.
The budget’s much-touted “dental program,” is not a program but a handout, which means it could be taken away anytime. It remains largely as it was introduced last year—a half-measure for those with family incomes below $70,000 per year, provided they pass through Canada Revenue Agency (CRA) means-testing.
Yet, on this issue—while offering his firm support for the budget—Singh has so far only shrugged, complaining that “The Liberals don’t seem to be as committed.”
Liberals look for cuts
While this is a deficit budget, the Liberal budget includes a number of hidden cuts.
The budget pledges to find $14.5 billion in cuts to all departments and to “work with federal Crown corporations to ensure they achieve comparable spending reductions.”
After lauding the Liberal-NDP agreement last year as a “refreshing ray of hope, the Canadian Labour Congress expressed concerns about the new budget—saying that the cuts buried inside of it, “could have a significant impact on workers and the services that people rely on.”
Students are the first to bear the brunt of these cuts. While they’ve seen their tuition fees more than double since 1995, this budget cuts grants for low-income youth by 30 per cent, from $6,000 per year to $4,200.
The National Housing Strategy, set up in 2017 to, among other things, repair Canada’s existing social housing stock, is also facing cuts—from $2.475 billion to just $820 million this year.
While the Liberals are demanding cuts, especially to programs for workers, the poor, and the youth, the same budget explicitly brags that Canada has “The lowest marginal effective tax rate on new business investment in the G7.” This is, in effect, a handout to Canada’s ruling class, financed too by “internal allocations,”—or cuts.
Life will not become ‘more affordable’
In the lead up to the budget, the Liberals promised not to “compensate” Canadians for the rising cost of living. And, on this issue, they were not lying.
For example, while acknowledging that at least 11 million workers are struggling to afford food, the 2023-2024 budget’s much-publicized GST Rebate—or “Grocery Rebate”—offers far too little to help. All told, while the average family of four will spend an estimated $16,288.41 on groceries in 2023-24, the GST Rebate provides a maximum payment of $467 per family of four.
The Canada Worker Benefit, which provides support to low-income workers, was also increased slightly, from $1,400 per year to $1,428. While the $28 increase might bring a hungry worker just shy of purchasing a few raw chicken breasts, it is hardly cause for enthusiasm.
On top of this, the budget also touts a $500 tax credit “to help low-income people who are struggling with the cost of rent.” So long as rent averages $9600 per year, this will do little to ease the crisis.
Military spending rises
While workers are forced to bear the brunt of real cuts to transfers, healthcare, and more, the budget offers billions more for war.
Specifically, after Budget 2022 allotted $7.2 billion in new “defence,” by 2027, Budget 2023 adds an additional $700 million to the Liberals’ war budget.
Going forward, the budget maintains the Liberals’ past pledge to meet NATO’s two per cent of GDP target by 2037. That will mean spending $63 billion annually on war—far in excess of healthcare and other social programs.
This will be used to kill and maim workers abroad and it will be, as it is now, financed at the direct expense of healthcare, education and other programs.
On this point, the NDP has offered the Liberals its unequivocal support. “As the leader of a workers’ party,” Singh said, “we would support increased military funding to give military workers the tools they need to do the job they are asked to do.” The fact that the only time Jagmeet Singh calls the NDP a “workers’ party” is to defend military funding is beyond parody.
Living on borrowed time
The Liberal-NDP deal is set to continue until 2025. Already, the Liberals have broken or ignored their past promises and, in the budget, proposed a plan to pivot to austerity.
The budget observes: “The wide range of views among forecasters highlights many plausible outcomes, ranging from a soft landing to a more pronounced downturn.” This “uncertainty,” the budget observes, will require a program of “prudent economic and fiscal planning.” According to the Globe, Canada’s deficit stands at roughly $1.1 trillion—leaving the federal government with little room for additional deficit financing, especially if its revenues collapse during a crisis.
Spurred by a combination of spiking inflation and interest rate shocks, RBC has more clearly predicted a general “downturn,” by the end of 2023. The bank’s most recent analysis warned: “No parts of the country will be sheltered from the stiffer economic headwinds.”
As the same Liberal Party carried out the deepest austerity program in Canadian history, one should expect the worst.
The Liberals are attacking and will continue to attack workers, the poor and the youth not merely because they are bad people, but because of the needs of capitalism. The profits enjoyed by the capitalist class do not fall from the sky. The factory owners live off of the workers’ collective labour, the landlords hike their rent, and the retail owners gouge them at the point of sale. In a crisis, they will fight to ensure that their profits increase—and that will mean austerity, wage cuts, evictions, and all the ills of the present crisis exacerbated—aided by Canada’s capitalist politicians.
Propping up the status quo: A gift to Poilievre
The Liberals are seeing their support evaporate among ordinary people because they, as the main party of Canadian capitalism, offer nothing to ordinary people. This budget further confirms that.
The Liberal-NDP agreement, in this context, has already invited ridicule from the right. “Only Jagmeet Singh could walk into a room with Trudeau and come out with a deal where he gets nothing,” former Prime Minister Stephen Harper said. “I just wish I had an opposition leader like that.”
Conservative leader Pierre Poilievre’s anti-establishment rhetoric, in this context, is already finding a small base even among union members. According to a recent poll by Abacus Data, Poilievre’s Conservatives are now the top choice of union members in Canada.
Poilievre is a right-wing demagogue with a clear program to enrich the wealthy at the expense of ordinary workers. However, he may gain against the Liberals’ less clear program to enrich the wealthy at the expense of ordinary workers, propped up by the NDP.
It is unclear how Singh can both claim to oppose the Liberals while doing all he can to keep them in power. Indeed, Canada’s right-wing journalists have noted the effective evaporation of the differences between the Liberals and Singh’s NDP. Recently, Le Devoir columnist Konrad Yakabuski observed: “The differences between the two parties have become so small that the two parties are now virtually interchangeable.”
Working class people are being crushed by a housing crisis, runaway inflation, stagnant wages and persistent unemployment. They have good reason to be angry. The NDP has tied itself to a discredited status quo. Accordingly, despite the scale of the crisis, workers and youth largely are not looking to the NDP as an avenue for struggle, and the party remains a distant third in the polls. This is evidence enough that the confidence-and-supply deal is a mistaken strategy and rather than fighting Poilievre, is leading precisely in the direction of a Poilievre victory.
The experience of Trump shows that right-wing populism cannot be defeated by establishment politics, which only feeds into their arguments. The only way to stop Poilievre from coming to power is by breaking from the Liberals and channeling the growing working class anger in a socialist direction. This means showing people that things do not have to be one of various shades of bad. A socialist solution would propose: taking the wealth of society out of the hands of Canada’s capitalists so that we could provide housing, employment, pharmacare, dentalcare, childcare, and good food for all. That is the way forward.
