Analysis of the 2024 Federal Budget

The Honourable Chrystia Freeland tabled Budget 2024 this afternoon in Ottawa. This will likely be the second-last budget delivered before the anticipated election in 2025.

The inclusion of a pharmacare plan in this budget, a deal with the federal New Democratic Party (NDP), virtually guarantees that the budget will pass as tabled. The government collected $497.8 billion in revenues and has now posted a $39.8 billion deficit. Between the Fall Economic Statement of 2023 and this budget, revenues increased by $7 billion; however, those revenues were outstripped by new investments over the same period. Inflation rates are down significantly from the peak of 8.1%, but interest rates are expected to stay higher for a bit longer than the government had estimated in the Fall Economic Statement. Unemployment is up, and expected to continue rising, even as job vacancies persist.

The government left little to the imagination in the lead-up to today’s announcement. Many announcements over the past two weeks introduced key concepts and areas of focus for the budget. Billions and billions of dollars of new spending had been delivered before Minister Freeland’s speech in the House of Commons.

The Liberals’ focus on new investments in housing is the headline of this budget cycle. In addition to the National Housing Strategy introduced last week, the government is signaling its intention to work with stakeholders and partners to make more federal lands and facilities available for housing. This news targets Canada Post and Department of National Defence lands and assets in the short-term and will roll out over the next few months in conversation with housing providers, developers, and municipalities.

Other pre-budget announcements included major funding commitments for the Department of National Defence, a National School Food Program, and an Artificial Intelligence Strategy.

Canadians have told the government via public polling that they are, broadly, unhappy with the direction in which the country is headed. Anxiety about housing, the cost of living, and business and productivity growth are fueling dissatisfaction. For their part, the Liberals are running out of runway to turn things around before the election, expected in just over 18 months.

We anticipate the opposition Conservatives will attack the government for their lack of fiscal discipline, but will find few housing measures that they can criticize as the government has adopted multiple pillars of their housing playbook.

Overall, the economy is performing better than public anxiety would indicate. Unfortunately for the Liberals, reports from leading economists don’t factor as strongly as consumer confidence at the ballot box. It remains to be seen whether a “soft landing” for the economy will translate to polling strength for the government as they head into a critical summer and final year of Parliamentary posturing before the next campaign gets underway.

Bottom Line for Consulting Engineering Companies

ACEC was very involved in the budget deliberation process, sharing ideas as early as last September with officials at Finance Canada. As a result, we had representation at the budget lockup today on Parliament Hill.

In this Budget, the government has put a significant emphasis on housing and infrastructure, as seen in the pre-budget tour in the previous weeks. The rhetoric used by Minister Freeland highlights that they are recognizing that the government’s housing commitments will require large-scale and long-term infrastructure investments. The Canada Housing Infrastructure Fund is the government’s initial step into this space as a stopgap to address immediate infrastructure needs, but there will be a gap in the years following 2028-2029 that will require consistent support. Although the government has not yet delivered the National Infrastructure Assessment (NIA), the momentum from Budget 2024 is a strong opportunity for a continued push towards the NIA’s implementation.
Additionally, the government has not yet announced a successor program to the Investing in Canada Infrastructure Program (ICIP) – while other announcements included in this Budget will supplement infrastructure funding, an ICIP successor program is essential to ensuring continuity in Canada’s infrastructure maintenance and asset management. This funding must be announced prior to Budget 2025 to support Canada’s infrastructure needs.
Next Steps
In the coming weeks, ACEC staff will undertake the following steps to further its advocacy efforts on behalf of the industry:
1. Continue meeting with the National Infrastructure Assessment Secretariat Directorate to highlight the importance of a comprehensive NIA in order to prevent future housing and infrastructure crises.
2. Continue advocating to the Department of Housing, Infrastructure and Communities for a successor to the ICIP to ensure a sustainable source of funding to support Canada’s infrastructure.
3. Investigate the potential liability and intellectual property implications of the Housing Design Catalogue.
4. Seek clarification on Red Tape Reduction means proposed in the Budget.

Fiscal and Economic Highlights

Government Fiscal Situation
$497.8 Billion in Revenues for 2024-2025
$534.6 Billion in Expenditures for 2024-2025
Deficit of $39.8 Billion for 2024-2025
There is no plan to balance the budget in the near-term. A deficit of $20.0 Billion is anticipated in 2028-2029
Canada’s net debt as a share of the economy remains lower today than in any other G7 country
Finance Canada sees a shallow recession in Canada, led by housing market challenges and geopolitical tensions keeping inflation and interest rates elevated for longer than expected with adverse effects on confidence and consumer activity.
However Finance Canada also sees moderately faster economic growth that sees higher export demand in Canada and improved global commodity prices.

Overall Economic Picture
Growth slowed but outperformed expectations
Interest rates remain at 5%
Inflation is down from a peak of 8.1% to 2.8% in February 2024
Wage growth has outpaced inflation for the past 13 months
Canada has avoided the recession that some predicted:
o  1.1 million more jobs than pre-pandemic
o  Fastest jobs recovery in the G7
o  Real wages are up
The OECD and IMF predict Canada will have the strongest economic growth in the G7 in 2025
The unemployment rate is expected to rise to a peak of 6.5% in the fourth quarter of this year and average 6.3% in 2024

New Investments

Housing & Infrastructure
The government showed their recognition that infrastructure is an essential component for building new communities: “Building more homes in communities that people want to live in requires building more essential infrastructure, like power lines, transit stations, water and wastewater facilities, internet cables, libraries, and recreation centres. Without this infrastructure, communities have trouble growing, and new homes cannot get built.”
In 2024-25, up to an estimated $8.3 billion in federal funding could be disbursed across the government’s suite of infrastructure programs pending the participation of provincial and municipal governments. Funding will continue to grow over the coming years, with a projected peak of $11.3 billion in 2027- 28. In total, the federal government expects to provide $57.3 billion in support of infrastructure projects across the country from 2023-24 until 2028-29.
Canada Housing Infrastructure Fund
Budget 2024 proposes to provide $6 billion over 10 years, starting in 2024-25, to Infrastructure Canada to launch a new Canada Housing Infrastructure Fund. The Fund will accelerate the construction and upgrading of housing-enabling water, wastewater, stormwater, and solid waste infrastructure that will directly enable new housing supply and help improve densification. This Fund will be comprised of:
o  $1 billion available directly to municipalities to support urgent infrastructure needs that will directly enable housing supply.
o  $5 billion for agreements with provinces and territories to support long-term priorities. Provinces and territories can only access this funding if they commit to key actions that increase housing supply:
Legalize more housing options by adopting zoning that allows four units as-of-right and that permits more “missing middle” homes, including duplexes, triplexes, townhouses, and small multi-unit apartments
Implement a three-year freeze on increasing development charges by municipalities with a population greater than 300,000
Adopt forthcoming changes to the National Building Code to support more accessible, affordable, and climate-friendly housing options
Provide pre-approval for construction of designs included in the government’s upcoming Housing Design Catalogue; and,
Implement measures from the forthcoming Home Buyers’ Bill of Rights and Renters’ Bill of Rights
o  Provinces will have until January 1, 2025, to secure an agreement, and territories will have until April 1, 2025. If a province or territory does not secure an agreement by their respective deadlines, their funding allocation will be transferred to the municipal stream. The federal government will work with territorial governments to ensure the actions in their agreements are suitable to their distinct needs.
o  To ensure this funding reaches communities of all sizes and needs, provinces must dedicate at least 20% of their agreement-based funding to northern, rural, and Indigenous communities.
ACEC is concerned that the prescriptive eligibility criteria may discourage some municipalities and provinces from participating in this program.
The Canada Infrastructure Bank’s Housing Initiative
In March 2024, the Canada Infrastructure Bank (CIB) announced the launch of its Infrastructure for Housing Initiative to provide low-cost financing to enable municipalities and Indigenous communities to build housing-enabling infrastructure. Funding for this initiative is sourced from the CIB’s existing funding envelope.
Green and Inclusive Community Buildings Program
Budget 2024 proposes to provide $500 million over five years, starting in 2024-25, to Infrastructure Canada to support more projects through the Green and Inclusive Community Buildings program.
Housing Design Catalogue
Budget 2024 proposes $50 million over two years, beginning in 2024-25, on a cash basis, through Canada’s Regional Development Agencies to support local innovative housing solutions across the country, such as designing and upscaling of modular homes, the use of 3D printing, mass timber construction, and panelized construction
o Any new innovative housing designs funded through the Regional Development Agencies and NGen will feed into the Canada Mortgage and Housing Corporation’s work on the Housing Design Catalogue
Budget 2024 proposes to provide $11.6 million in 2024-25 to support the development of its Housing Design Catalogue for up to 50 housing designs, such as modular housing, row housing, fourplexes, sixplexes, and accessory dwelling units, that provinces, territories, and municipalities could use to simplify and accelerate housing approvals and builds.
o  This first phase of the catalogue will be published in fall 2024
ACEC is awaiting clarification on intellectual property and liability implications arising from the reuse of designs as proposed by the Housing Design Catalogue.
Stakeholder Engagement
In the coming months, the government will engage with housing, construction, and building material sectors, along with labour unions, Indigenous housing experts, and other relevant stakeholders, to co-develop a Canadian industrial strategy for homebuilding.
To improve engagement and partnerships, including with Indigenous partners, Budget 2024 also announces that the government will:
o  Advance Indigenous participation in major projects, through the Indigenous Loan Guarantee Program detailed in Chapter 6, which will provide more opportunities for Indigenous communities to benefit from the significant number of natural resource and energy projects proposed to take place in their territories;
o  Work to establish a Crown Consultation Coordinator to ensure efficient and meaningful Crown consultation with Indigenous peoples on the issuance of federal regulatory permits to projects that do not undergo federal impact assessments. The government will consult First Nations, Inuit, Métis, and Modern Treaty and Self-Governing Indigenous partners on the design of the Crown Consultation Coordinator. The Impact Assessment Agency of Canada will continue to be the Crown consultation body for all federal decisions related to projects that undergo federal impact assessments; and,
o  Improve Indigenous capacity for consultation by advancing the co-development and implementation of consultation protocol agreements and resource centres, led by Crown-Indigenous Relations and Northern Affairs Canada.
Data Collection
To help modernize housing data, Budget 2024 proposes to provide $20 million over four years, starting in 2024-25 for Statistics Canada and the Canada Mortgage and Housing Corporation to modernize and enhance the collection and dissemination of housing data, including municipal-level data on housing starts and completions.


Project Timelines
Budget 2024 announces measures to help clarify and reduce timelines for major projects, so they can get built faster:
o  Provide $9 million over three years, starting in 2024-25, to the Privy Council Office’s Clean Growth Office to implement the recommendations of the Ministerial Working Group and reduce interdepartmental inefficiencies, including preventing fixation on well-studied and low-risk impacts, ensuring new permitting timelines are upheld throughout departments, and improving data sharing between departments to reduce redundant studies.
o Establish a new Federal Permitting Coordinator within the Privy Council Office’s Clean Growth Office.
o Set a target of five years or less to complete federal impact assessment and permitting processes for federally designated projects, and a target of two years or less for permitting of non-federally designated projects;
o Issue a Cabinet Directive to drive culture change, achieve new targets, and set out clear federal roles and responsibilities within and across departments to get clean growth projects built in a timely and predictable manner;
o Build a Federal Permitting Dashboard that reports on the status of large projects which require permits, to improve predictability for project proponents, and increase the federal government’s transparency and accountability to Canadians; and,
o Set a three-year target for nuclear project reviews, by working with the Canadian Nuclear Safety Commission and Impact Assessment Agency of Canada, and consider how the process can be better
To advance the principle of “one project, one review”, Budget 2024 proposes to:
o Amend the Impact Assessment Act to respond to the October 2023 Supreme Court of Canada decision that ruled that elements of the Act are unconstitutional. The proposed amendments will ensure the Act is constitutionally sound, facilitating efficient project reviews while advancing Canada’s clean growth and protecting the environment. An amended Act will provide certainty for businesses and investors through measures that include increasing flexibility in the substitution of assessments to allow for collaboration and avoid inter-jurisdictional duplication, clarifying when joint federal-provincial review panels are possible, and allowing for earlier Agency screening decisions as to whether a full impact assessment is required after the Planning phase.
o Enhance coordination across orders of government using the tools available under the Impact Assessment Act and permitting coordination mechanisms, to reduce duplication and minimize the burden of regulatory processes on project proponents and Indigenous groups; and,
o Engage Northern Premiers, Indigenous communities, industry, and other partners to discuss transformative changes to their unique project review frameworks, to ensure the North is also prepared to assess and build clean growth project

Asset Management

Budget 2024 proposes to provide $6.7 billion over 20 years, starting in 2024-25, to Public Services and Procurement Canada in support of managing its portfolio of assets.
o This includes support for Laboratories Canada facility upgrades, the rehabilitation of the Alaska Highway, continuing restorations within the Parliamentary Precinct, modernizing the Receiver General information technology systems that make over 300 million payments to Canadians each year, and advancing the necessary rehabilitation of the Supreme Court of Canada building.
Budget 2024 announces the government’s intent to introduce legislative amendments to make VIA HFR-VIA TGF Inc. an Agent of the Crown, enabling VIA HFR-VIA TGF Inc. to deliver high-frequency rail on behalf of the government.
o Budget 2024 also proposes to provide $371.8 million over six years starting in 2024-25, to VIA HFR-VIA TGF Inc. and Infrastructure Canada to advance the design and development of high-frequency rail.

Red Tape Reduction Act

Budget 2024 announces the government’s intent to introduce amendments to the Red Tape Reduction Act to broaden the use of regulatory sandboxes across government. The changes will enable innovation by offering limited exemptions to existing legislation and regulations, streamlining the regulatory system, and reforming regulations to modern business realities
This communication has been prepared by ACEC and its government relations partner First Lake Solutions for the convenience of its member firms. It is not intended as a comprehensive guide to the budget. For details on Budget 2024, please visit the Government of Canada’s Budget 2024 website.