What Budget 2017 means for young Canadians

Natalie Brunet & Caleb Holden

Last March, a careful listener might have been able to pick out the collective sigh of Canadian youth as they realized that the Trudeau Government’s first budget – touted as his chance to deliver on the many promises in the Liberal platform directed at 18-24 year olds – had come up short.

During the 2015 campaign, Trudeau had focused significantly on his passion for youth issues, even crediting them as his motivation to enter politics. While Budget 2016 did deliver over $300 million in new funding for young Canadians through the Canada Youth Employment Strategy and Canada Summer Jobs program, commitments to waive employment insurance premiums for new youth hires were noticeably absent. More importantly, critics highlighted concerns that these new programs amounted to tinkering within a broken system, rather than boldly confronting the labour market’s structural challenges.

Since then, the Expert Panel on Youth Employment, an independent federal body, has worked to identify the barriers to employment faced by vulnerable youth. Though the final report is expected this month, a December interim update revealed that more and more young Canadians face precarious, short-term contracts and that the digitization of the market has entrenched the importance of network effects for securing positions, rather than democratizing the job hunt. A StatsCan report released the same month supported these findings and found that real hourly wages for those aged 17-24 have dropped between 10-15% since the 1980s.

By June 2016, youth unemployment stood at 13 per cent. While 18,000 more jobs had been created over the previous year, this growth was driven by part-time work. More concerningly, the data pointed to young Canadians exiting the labour force: among returning students aged 20-24 the unemployment rate remained steady year-over-year at 10.5%, yet the employment rate was down by 3.2 to 64% year-over-year.

Cue the moment for “Real Change” – the Liberals’ ‘innovation budget’ 2017 – which many hoped would work from 2016’s foundation to address the intractable problems facing the over seven million 15-29 year olds most pundits lump together as Millennials and Generation Z.

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Budget 2017: The Good

Significant attention has focused on Budget 2017’s ban on unpaid internships in federally regulated sectors – other than those that are part of an educational program. This move will have an impact on positions in the banking, telecommunications, and transport sectors and it reverses earlier proposed changes to the Canadian Labour Code, which were highly criticized by the Canadian Intern Association. While the total number of positions affected will remain minimal, intern rights advocates are calling the measure an important first step.

Budget 2017 will also help young people gain the skills and experience they need to access the job market through the Youth Employment Strategy. The initiative, which includes the Canada Summer Jobs as well as employer- and organization-led employment programs, will receive $395.5 million over the next three years, with $150 million for the next fiscal year. $8.6 million have been earmarked for the Toronto Youth Job Corps, a full-time paid employment preparation program, which will impact 1,320 youth.  

To improve youth access to education, Budget 2017 expands part-time student eligibility for Canada Student Loans beginning in the 2018-2019 academic year. The government expects an additional 10, 000 students to become eligible for loans at a cost of $59.8 million over 4 years and $17 million each year thereafter.

In more targeted funding, an increase of $90 million over two years has been committed to the Post-Secondary Student Support Program, which distributes non-repayable financial support to Indigenous students. Planned spending for the program stood at $353 million in 2016, meaning the additional funds will substantially increase the budget of the program, allowing more than 4,200 students to be covered over the next two years.

The Bad

Most media criticism of the budget has focused on pocketbook issues such as the excise tax increase on alcohol (2%) and tobacco (2.5%), GST and HST taxation on Uber, or the elimination of the Public Transit Tax Credit (PPGR’s Jonathan Kates explained why the latter may not be as bad as it seems). Though these changes seem to hit hardest when you want a night out on the town, Canadian youth ought to be more concerned with the lack of action on areas that hit home: rising house prices and household consumer debt.

Among 18-24 year olds, average debt, excluding mortgages, stands at $8,343, with the amount nearly doubling for those aged 25-35. While the Fall Economic Update did reduce highly leveraged home purchases, helping to secure the housing market, young buyers are the ones hardest hit, as new down payment requirements are not offset by first time buyer credits. For many young Canadians, home ownerships may continue to be a dream.

Another area of focus is the allocation of $225 million over four years and $75 million per year thereafter to create “a new organization to promote skills development and measurement in Canada.” While this new organization yet to be named, many anticipate it to follow closely from the Future Skills Lab proposed by Government of Canada’s Advisory Council on Economic Growth.

As the C.D. Howe Institute’s Rosalie Wyonch highlights, however, the organization may be less innovative than it first appears. Noticeably absent from the announcement is the Advisory Council’s  recommended funding increase to Statistics Canada’s capacity to study the labour market. Without the necessary data, the organization will struggle to fulfill its mandate to identify and invest in the skills sought by Canadian employers. Furthermore, it is unclear whether the stated goal of funding 30 to 90 per cent of new training programs includes the numerous public and private sector initiatives already directed toward this objective.

The Bottom Line

Budget 2017 begins to address the structural issues facing Canadian youth in the ways that many had expected following the Liberal Party’s October 2015 electoral victory. Despite these commitments, however, the Trudeau government must demonstrate that these new investments are up to the task of building economic success for Canada’s next generation within a twenty-first century economy. In the interim, short term indicators such as the Expert Panel’s final report or yesterday’s release on the future of work for Canadian youth from the Brookfield Institute will offer an early glance of whether the Government is on the right course.

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Natalie Brunet is a Master of Public Policy candidate at the School of Public Policy and Governance, University of Toronto and a Junior Fellow of Massey College. A proud Franco-Ontarian, Natalie has lived in five different provinces, including New Brunswick, where she obtained her Bachelor of Arts in International Relations from Mount Allison University. Most recently, she worked on the Hill through the Parliamentary Internship Programme and in youth civic engagement at CIVIX. Her policy interests include social and urban policy, civic engagement and the complexities of intergovernmental jurisdiction.

Caleb Holden is a first year MPP candidate and a Junior Fellow at Massey College. He recently graduated from McGill University where he was the co-Editor-in-Chief of the McGill Students’ Indigenous Studies Journal. His research interests include Canadian energy policy, the place of cities and Indigenous governments in contemporary federalism, and the changing role of the media in Canadian society. Originally from Winnipeg, he’s on a quest to make the Prairies relevant to everyone he encounters during his stay in The Centre of the Universe.

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