Yesterday’s announcement of a new Federal budget for Canada brought with it certain surprises and other long-expected revisions. For the average citizen looking to improve their financial situation, however, the biggest story was right at the top of the page. The budget offers help for parents, seniors and millennials, but its most notable feature is an acknowledgment of the challenges faced by middle class Canadians, those whose median income has struggled to improve in the face of rising household and consumer debt.
To start, tax rates for lower income earners will be set to decrease, offset by a rise in the rate for the highest earning individuals. Families making less than $195,000 combined will be eligible for the Canada Child Benefit, a tax-free credit.
The financial struggles of millennials are also recognized in the budget. College and university graduates won’t have to start repaying a debt under the Canada Student Loans program until they are earning $25,000 a year. This measure provides needed relief in today’s tough job market – unfortunately for current students, credits for textbooks and other educational materials are being phased out. The Canada Student Grant, for young people from low-income families, will grow to $3,000 a year from $2,000 for the 2016-17 academic year; students from middle class families will see the grant rise to $1,200 from $800.
The contentious issue of housing affordability in growing markets was also addressed. Tuesday’s budget proposes to invest $2.3 billion in affordable housing over two years starting in 2016-2017, as well as investing $500,000 into statistical inquiries on foreign ownership.
For new Finance Minister Bill Morneau, this budget represents the first chance to clearly theme and orient the Liberal government policy on spending as well as its attitude toward the development of solutions to important social challenges. It appears that by making major financial milestones (such as buying a home or starting a family) easier to cope with, the new budget may provide a platform from which Canadian personal financial standards can improve.