How the federal budget affects everyday Canadian families
Bruce Ball attended the budget lock up with the Toronto Star. He crunched the numbers for various types of Canadian families to determine what’s in it for each. He has been a chartered professional accountant for more than 25 years and is the head of BDO Canada’s national tax department.
All numbers are approximate based on 2015 tax brackets and credit amounts and based on income estimates.
James Hathaway and Megan Burns
Ages: He is 39, she is 37.
Occupation: He is a high school teacher, she works in educational publishing.
Annual household income: $151,000. He earns $89,000, she earns $62,000.
Children: Owen, 6, and Anna, 4. Both are in daycare at a cost of $1,255 a month.
Housing: Own their house outright. No mortgage.
Federal tax payment (before and after middle class tax shift): Before budget: $18,900; After budget: $18,720; Pocketbook difference: +$180
Child benefits: Before budget: UCCB: $1,860; After budget: CCB: $2,300; Pocketbook difference: +$440
Children’s fitness tax credit: Before budget: $300; After budget:$150; Pocketbook difference: – $150
“A drop in the bucket” is how Megan Burns described the extra $470 that her family will receive under the Liberal government’s maiden budget.
But she’s not complaining. With a combined income of over $150,000, Burns said she and her husband James Hathaway are on the upper end of the middle-class bracket that the Liberals targeted with their budget.
Most of the extra cash Burns and Hathaway will receive comes in the form of the new Canada Child Care Benefit, which is more heavily skewed to benefit low-income and middle-class families than the previous Conservative government’s child benefit. Burns said she thinks that’s only fair.
“I’m really happy that we don’t get a massive payout if it means that other people who need it more than us do,” she said.
Burns takes public transit to get to work, and welcomed the $3.4 billion in transportation funding announced Tuesday as “desperately needed” for aging systems like Toronto’s.
“The TTC . . . it’s so full to capacity with no wiggle room, any time anything goes wrong it’s a catastrophic day for everybody involved,” said Burns. About $1.5 billion of the transit fund will be spent in Ontario over five years.
Both Hathaway and Burns said they would like more specifics about Liberal plans to increase access to child care. The couple said the competition for spots in downtown Toronto shocked them when they first tried to sign up their kids.
There doesn’t appear to be any immediate relief in the budget on that front. The document proposed to invest $500 million to establish a “national framework” for child care, but not until 2017-2018.
The couple also wanted firmer commitments about expanding the Canada Pension Plan. While Hathaway has a teacher’s pension, Burns’ retirement savings are completely up to her. She contributes to her RRSP but she would appreciate help from the federal government. The Liberal budget pledges merely to continue talks with the provinces and territories on an enhanced CPP.
“I’m happy to see that it’s a conversation. But I’m not going to get excited until I hear details,” said Burns.
What they hoped for:
Action to help Canada reach the targets set out in the Paris Agreement on climate change.
Increased funding for Toronto’s public transit
What surprised them:
The $8 billion to address challenges facing aboriginal communities. “I’m very glad to see it being taken seriously for the first time in decades,” said Burns.
Hathaway said he was “very excited” that the budget included $62.5 million for electric vehicle charging stations. He plans to buy an electric car in a few years.
Occupation: Owner, Premier Healthcare Services Etobicoke
Annual household income: $170,000: he earns $120,000, his wife Gael earns $50,000
Children: 28-year-old son
Housing: Owns in Etobicoke
Federal tax payment (before and after middle class tax shift): Before budget: $27,770; After budget: $27,020; Pocketbook difference: +$750
Gary Hepworth owns an Etobicoke franchise that employs about 80 personal support workers for seniors. He and his wife Gael have no retirement date in mind, but he expects to continue working for a long time still. The days of Freedom 55, he says, are gone.
Nevertheless, Hepworth said he was satisfied with the Liberal pledge to invest in both public transit and housing after catching up on the budgetary details Tuesday afternoon, even if their deep dive into the red caught him by surprise.
Prime Minister Trudeau “told us he was going to have a deficit but I didn’t think it was going to be this high,” said Hepworth of the projected deficit of nearly $30 billion. “This is a tax on future generations that at some point, we are going to need to pay back.”
Yet the absence of a plan to address provincial health care costs and ensure family caregivers get the support they require concerned the 58-year-old the most.
It’s a common symptom experienced by Canadians stuck in the “sandwich generation” — Baby Boomers who simultaneously care for aging parents and help with their adult children. Between work, a volunteer position with the Canadian Association of Retired People and caring for his 80-year-old mother and a mother-in-law struggling with dementia, he knows the struggles of senior care firsthand.
His mother-in-law is finally in a good long-term home, but it took five years on a waiting list to get her there. In the meantime, his wife was her primary caregiver, which was both exhausting and demanding.
“I want to make sure that when I age and others age, the health care system is sustained and funded,” he said, adding that the country’s aging population is living longer and facing chronic diseases. “Even now, I see people who quit their jobs in order to take care of their parents because there is no other option.
“So the fact we are growing a deficit but invested nothing in health care is a concern.”
The federal tax shift announced Tuesday will give Hepworth and his wife an extra $750 by the end of the year, savings he wished the government had kept to fund health care instead.
Occupation: Laid-off housing outreach co-ordinator
Annual household income: Was $42,000. Now waiting to collect EI.
Children: Single mother of 23-year-old and 19-year-old sons
Housing: Social housing, was $900 a month in rent, now subsidized to $100
Federal tax payment on 2015 income of $42,000: Before budget: $4,025; After budget $4,025; $0
What do you think of the 2016 federal budget? Are you concerned about the projected $29.4 billion deficit?
All these government investments are necessary. I’m glad to see the investment in education and infrastructure. If they don’t, there will be more deficits because of the issues arising if they didn’t help these people. Of course, they also should take care of the deficit to make sure they don’t get lost in it.
You would be paying the same amount of federal tax in 2016 as you did last year. Do you feel the budget is relevant to you?
At a personal level, it’s not very good for me. I’m a single parent. Everybody beside me is poor. I can’t even borrow money from them. But the budget is very good for the aboriginal community, with all these investments into their education, housing and water. I’m half Inuit and I’m looking forward to the improvement for the community.
That’s very good and very much needed. They are probably going to save a lot of money by doing that. I know they are not going to be saving the money now, but if they are not going to deal with those issues, they are going to get worse.
You lost your job as a housing outreach co-ordinator in February. What do you think of the easier access to employment insurance?
I’ve applied for two jobs and have an interview tomorrow and on March 30. I want to work right away and I don’t want to be on EI because they monitor everything. I hate that. It’s great if I need to be on EI and they give me longer time or more money. If there is no job and I’m not getting hired, it can help.
The economy keeps changing. Do you feel there’s enough in the budget to help retrain Canadians?
There are resources, yes, but they are not easily accessible. Depending on certain criteria, you can’t apply for stuff. The way to get it is sometimes difficult. It’s one thing on the paper, but accessing it is another issue. It’s a problem we run into all the time in the aboriginal community.
What do you like the most about today’s budget?
I really like the $40 million set for the inquiry into missing and murdered indigenous women. There are so many violent deaths and violence happening and nobody was caring. They need to address it. They will be saving the money. It’s long overdue. We need it. They have put us on the back burner too long.
Annual income: $8,000
Housing: Lives at home with her parents.
Federal tax payment (before and after middle class tax shift): Before budget: $0; After budget: $0; Pocketbook difference: $0
Student grant (kicks in 2017): Before budget: $2,000; After budget: $3,000; Pocketbook difference: +$1,000
Too little for students
Madina Siddiqui, whose father is a server and mother is a daycare worker, said there is little in the budget that would directly benefit college students. She receives $2,000 a year in a student grant for low-income households, which will rise to $3,000. “I believe in free education. The budget is disappointing,” said Siddiqui, who relies on OSAP and is already $15,000 in debt.
35,000 more student summer jobs
The budget earmarks $339 million to expand the Canada Summer Jobs program for youth who are full-time students. Siddiqui said college students struggle to survive and many are forced to go to school part-time, which would disqualify them for the program. “That’s not a big number. It will be very competitive. Many students cannot do it because of summer school. It won’t make any difference if these jobs only pay minimum wages,” she said.
Education tax credit and textbooks eliminated in 2017
Siddiqui works two part-time jobs as a retail salesperson and a karate instructor, for a total of 10 hours a week. Living with her parents, she doesn’t pay rent, but she is responsible for her $7,000 tuition, food, books and transit with her $8,000 income and a $5,000 student loan. “I have learned to budget, but it’s really tough. We are the future of Canada, the future of Ontario, we need to be treated properly.”
Precarious jobs after graduation
Many graduates work in fast-food restaurants and retail jobs while trying to gain professional work experience through unpaid internships. Siddiqui said the government needs to apply pressure to hiring youth full-time. “It’s so hard to find a decent full-time job in our field and employers complain we don’t have enough experience. We can’t afford grad school, and people end up setting for something they have to.”
Annual household income: $24,200 ($11,000 from government pension plus $7,200 from CPP and $6,000 from OAS)
Housing: Rent $960 a month
Federal tax payment (before and after middle class tax shift): Before budget: $576; After budget: $576; Pocketbook difference $0
Gisele Bouvier has worked since she was 17 in everything from banking to cartography. She owned her own graphic arts and screen printing business for nearly 20 years, but closed the business when her partner died. At the time, she was in debt, with little saved for retirement.
In 1997, she started again. Bouvier returned to school and worked for the government, saving about $9,000 a year for retirement before she was laid off at 62 in 2013.
“I was catching up for the years I did not have enough to save,” she said, adding that she was prepared to work until she turned 72. “But I’m kind of scared it won’t be enough.”
With early retirement forced upon her, she’s now living on a fixed income that’s less than she planned for.
“You can’t believe how low CPP is,” Bouvier said of the $600 a month she receives from the Canadian Pension Plan. “I do have to dip into my life savings.”
Because rent in Ottawa consumes about 50 per cent of the retiree’s income, Bouvier was happy to hear the Liberals commit to increasing affordable housing for seniors. Tuesday’s budget proposes to provide just over $200 million over two years for the construction, repair and adaption of seniors housing.
“There is a dire need for affordable social housing,” she said. “It is currently a very weak point in the system.”
On the public safety front, Bouvier noted the lack of defence spending wasn’t a cause for concern. “Military expenses are too expensive,” she said.
Bouvier was also pleased to learn that the Guaranteed Income Supplement will be boosted to $947 annually, even if she won’t benefit from it directly. The income cut off remains fixed $8,400 a year and Bouvier is ineligible after taking in just a bit too much to qualify.
One of Bouvier’s problems is retiring at a time when interest rates are low. As a result, she’s not seeing the type of returns she expected.
“With the low interest rates, I’m sure there are a lot of seniors who are dipping into their capital a lot more than they expected and at one point you’ll have a bunch of people with no money and that’s going to blow up in the government’s face one day.”