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Rapid Policy Update: 2024 Federal Budget Ontario Business Perspective

OCC Federal Budget 2024 Reaction

On April 16, 2024, the Government of Canada released its 2024 Budget: Fairness for Every Generation. The following is a summary of highlights from the perspective of Ontario’s business community.


Budget 2024 announces a cumulative $8.5 billion in new funding to build 3.87 million new homes by 2031-32. The Budget delivers specific funding commitments to support policies outlined in Solving the Housing Crisis: Canada’s Housing Plan, including direct funding for business subsidies, grants, tax incentives, and support for individuals.

On the supply side, the government is providing new funding to boost home construction, including $15 billion for the Apartment Construction Loan Program to build a minimum of 30,000 new rental apartments; $6 billion for water and wastewater infrastructure through a new Housing Infrastructure Fund; and a $400 million top-up to the Housing Accelerator Fund for direct deals with municipalities to speed-up home construction. With a total spend of $4.4 billion, the government says the latter program will build 750,000 new homes.

To preserve below-market affordable housing for the most vulnerable Canadians, the Budget also invests $1.3 billion for Canada’s Homeless Strategy and $1.5 billion to help non-profits acquire rental housing in an effort to maintain ultra-affordable apartments for those on low and fixed incomes.

For builders, the government is also increasing the capital cost allowance for purpose-built rentals from 4% to 10% to directly subsidize new construction. The Budget also expands the GST exemption to new student residences to alleviate new building costs in the face of a growing number of international students.

On the demand side, there are also a number of measures to provide direct support to individuals. For prospective homebuyers, the government is launching a Home Buyer’s Bill of Rights and is amending the Canadian Mortgage Charter to allow for 30-year amortizations for first-time homebuyers in new builds. The Budget also increases the RRSP Home Buyers’ Plan to allow individuals to withdraw up to $60,000 (up from $35,000). Existing homeowners will also benefit from new $40,000 low-interest loans to construct secondary suites on their properties and renewed $40,000 interest-free loans under the Greener Homes Affordability Program to retrofit for energy efficiency. Likewise, renters will benefit from a new Renters’ Bill of Rights, a $15 million tenant protection fund which sends a strong signal about cracking down on illegal rent increases, and the government says it will work with banks and creditors to include rent payment history in credit scores.

Finally, the federal government has announced an ambitious plan to leverage publicly-owned land to speed up home-building. The government says the program will unlock 250,000 new homes by 2031, using Canada Post locations, federal office buildings and exploring development on National Defence properties such as unused armouries.

OCC Analysis: We are encouraged to see the government continue to prioritize the housing affordability crisis in line with recommendations in the OCC’s policy brief, Home Stretched. The OCC commends the government for taking action to incentivize the construction of purpose-built rental and student housing, use existing public land to build housing, and foster collaboration with nonprofits and co-ops to support low-income housing.

The OCC also welcomes new funding for the Canada Housing Infrastructure Fund and Housing Accelerator Fund and is pleased to see infrastructure funding tied to inclusionary zoning policies such as fourplexes, which will help address the missing middle housing gap.

We are cautious about demand-side measures. While these changes provide short-term relief for home-buyers, they will also further increase demand-side pressures in the housing market, leading to higher prices and contributing to the crisis. Ultimately, supply-side measures to build more homes remain the best solution to address Canada’s national housing crisis.

Research, Innovation and Productivity

The budget includes several measures aimed at boosting innovation, research capabilities and technological advancements. These include:

  • $2.4 billion funding package for artificial intelligence (AI):
    • $2 billion to launch a new AI Compute Access Fund and Canadian AI Sovereign Compute Strategy to help Canadian researchers and start-ups access the computing capabilities to develop Canadian-owned and located AI infrastructure.
    • $200 million to boost AI start-ups to bring new technologies to market, and accelerate AI adoption in critical sectors (agriculture, clean technology, health care, and manufacturing).
    • $100 million in the National Research Council’s AI Assist Program to help small and medium-sized businesses build and deploy new AI solutions.
    • $50 million for the Sectoral Workforce Solutions Program to support workers with new skills training in potentially disrupted sectors.
    • $50 million to create a new Canadian AI Safety Institute to assist in the safe development and deployment of AI.
  • $725 million to incentivize investment in innovation by allowing businesses to write off the full cost of investments in patents, data network infrastructure equipment, computers, and other data processing equipment.
  • $600 million for future enhancements to the Scientific Research and Experimental Development (SR&ED) tax incentive program, which will be complemented with a second phase of consultations with industry.
  • Enhanced support for researchers, including $1.8 billion to increase core research grant funding, including SSHRC, NSERC, and CIHR.
  • Investments to the tune of $735 million in research and science infrastructure, including $45.5 million to support the Arthur B. McDonald Canadian Astroparticle Physics Research Institute at Queen’s University.
  • Investments in research talent at home including $825 million to increase both the annual value and number of master’s and doctoral student scholarships, and $30 million to support Indigenous participation in research.

OCC Analysis: AI and emerging technologies are changing the way we work and live. However, wider adoption remains a challenge, especially among SMEs given capital and skills gaps, as highlighted in our In Data We Trust and Broken Links reports. We welcome the investments in advancing Canada’s research capabilities and incentivizing businesses to build vital AI infrastructure, and look forward to catalyzing AI adoption among Canada’s business community as part of the OCC’s recently launched AI Hub.

We encourage the government to proceed swiftly with a review of the SR&ED tax credit, a key component of Canada’s innovation funding system. Finally, the government must consider a broader innovation strategy that complements recent federal announcements to ensure Canadian companies receive support for commercialization and scaling up technology solutions.

Economic Reconciliation

Budget 2024 includes several measures to support Indigenous communities and advance economic reconciliation, including:

  • $5 billion for a national Indigenous Loan Guarantee Program to unlock access to capital, and create economic development opportunities for Indigenous communities.
  • $918 million to accelerate work in narrowing housing and infrastructure gaps for First Nations, Inuit, and Métis communities
  • $350 million for Indigenous Financial Institutions to support autonomous, Indigenous-controlled institutions and trusts and accelerate investment in the Indigenous-owned economy.

OCC Analysis: We welcome the government’s announcement of the National Indigenous Loan Guarantee program, as advocated for in our 2024 Federal Pre-Budget Submission. This is a meaningful step in the right direction, as historically there have been significant barriers to entry for Indigenous communities in economic participation, highlighted in the OCC-CCAB Sharing Prosperity report. The budget announcement delivers on a longstanding recommendation from both Indigenous Peoples and corporate leaders. It will lead to faster project development, boost Canada’s prosperity and advance economic reconciliation by ensuring Indigenous communities directly benefit from project development on their territories.

The OCC also supports investments in Indigenous financial institutions to accelerate funding for the Indigenous economy. We encourage the government to move forward with the next steps to advance its National Economic Benefits Sharing Framework and the Economic Reconciliation Framework. We welcome the initial announcement of additional funding for housing and infrastructure but continue to call on the federal government to work with provinces, territories and the private sector to meet the full $349 billion in estimated unmet infrastructure needs on-reserve.


Budget 2024 announces the government’s intention to increase the capital gains tax rate from one-half to two-thirds for all capital gains above $250,000 realized by individuals and on all capital gains realized by corporations and trusts. This measure is expected to raise an estimated $19 billion in revenue over five years.

Further, in support of start- and scale-up businesses and to encourage entrepreneurship, the budget proposes a Canadian Entrepreneurs’ Incentive which will reduce the capital gains inclusion rate to one-third on a lifetime maximum of $2 million.

The budget also proposes returning a portion of fuel charge proceeds as part of the new Canada Carbon Rebate for Small Businesses. This involves returning more than $2.5 billion collected through the federal fuel charge in provinces (like Ontario) where Ottawa’s carbon price applies over the last five years.

OCC Analysis: The OCC is concerned that increases to the capital gains tax rate could have serious unintended consequences, such as crowding out badly needed private sector investment and causing capital and labour flight from Canada. The decision provides unwelcome disincentives for aspiring entrepreneurs and the investors they need.

The OCC believes that economic growth and productivity gains are the best way to increase revenue. We encourage the government to conduct a comprehensive and independent review of Canada’s tax system, emphasizing principles of competitiveness, simplicity, fairness, and neutrality. Reforms should aim to streamline the system and incentivize increased business investments.

On the other hand, we are pleased to see the government commit to returning overdue fuel charge proceeds to small businesses. The OCC has advocated for this as an urgent priority as businesses are owed those funds and facing severe liquidity challenges in light of inflation and interest rate hikes.

Energy and Green Economy

Budget 2024 introduces a series of measures intended to accelerate the buildout of major projects. These include amending the Impact Assessment Act and setting a target of five years or less to complete federal impact assessment and permitting processes (and three years for nuclear project reviews).To accomplish this, the government intends to establish a new Federal Permitting Coordinator in the Privy Council Office and issue a cabinet directive to enhance coordination between government agencies.

The Budget also introduces a few funding mechanisms to support biofuels production, including up to $500 million per year from the Clean Fuel Regulations compliance payment revenues, retooling and extending the Clean Fuels Fund, and $500 million through the Canada Infrastructure Bank’s green infrastructure investment stream.

Further announcements include the government’s intention to introduce a new 10 percent Electric Vehicle Supply Chain investment tax credit on the cost of buildings used in key segments of the electric vehicle supply chain for businesses that invest in Canada across three supply chain segments: electric vehicle assembly; electric vehicle battery production; and cathode active material production.

OCC Analysis: The OCC has underscored the need to modernize regulations to help accelerate energy infrastructure projects needed to meet Canada’s energy and net-zero needs.

Biofuels like Sustainable Aviation Fuels (SAFs) and landfill gas are integral to Canada’s net-zero transition. The OCC has advocated for tax incentives and innovative financing models to unlock private capital for low-carbon fuel projects like biofuels in order to support businesses with investments in the green economy. A federal investment tax credit (ITC) will support that aim and should ideally be complemented in Ontario by a provincial measure to support our regional competitiveness.

The Electric Vehicle Supply Chain investment tax credit is a welcome measure to boost the competitiveness of domestic EV investments, particularly in the face of the US Inflation Reduction Act. We also encourage the federal government to partner with provinces to invest in low-carbon vehicle research and development programs to support the advancement and commercialization of new technologies for medium- and heavy-duty vehicle classes.

Transportation and Supply Chains

Budget 2024 includes a series of measures to expand Canada’s transportation system and strengthen the supply chains, including $462.4 million to expand VIA Rail network operations and replace aging fleet on routes outside the Quebec City-Windsor corridor, $63.1 million to renew the Remote Passenger Rail Program, and $3.1 million to explore long-term solutions to minimize labour disputes and secure the stability of Canada’s supply chains.

OCC Analysis: The OCC welcomes investments in Canada’s rail systems to develop additional rail capacity, replace fleets used for long hauls and invest in long-term transit infrastructure projects. These investments are vital to supporting urban and rural economic growth. We encourage the government to continue collaborating with the private sector to raise capital for high-frequency rail lines that serve more communities in Ontario and promote energy-efficient transit solutions including electrification and vehicles blending renewable natural gas and hydrogen.

To protect Canada’s supply chains, we encourage the government to leverage bolder solutions outlined in our Supply Chain Disruptions and Delays and A Time for Renewal for Canada’s Supply Chains reports. These include adopting risk management and diversification strategies to help improve visibility and real-time management across business supply chains and continuing to leverage the Federal National Trade Corridor Fund to provide funding for critical component ports and airports of the global supply chain.

Health care

Budget 2024 mostly implements pre-existing funding measures, including the rollout of the Canadian Dental Care Plan and bilateral agreements with provinces, including $2.5 billion for Ontario, announced in February 2024. While new commitments were limited, some funding was announced, including:

  • $1.5 billion for a limited National Pharmacare Plan, which provides funding for specific contraception and diabetes medications.
    • $500 million for a new Youth Mental Health Fund to help community health organizations provide essential mental health services to young people.
    • $150 million for an Emergency Treatment Fund, open to municipalities and Indigenous communities, to help provide rapid responses to emergent, critical needs related to the opioid crisis.
  • $77.1 million for Foreign Credentialled Health Care Workers to more effectively integrate an estimated 198,000 internationally-educated healthcare professionals to meet growing healthcare human resource needs.

OCC Analysis: The OCC welcomes steps to improve the integration of internationally-trained health professionals and investments in mental health service delivery for youth. We encourage the government to continue to prioritize mental health and addictions through a whole-of-government approach to mitigate the outsized impacts faced by businesses and communities, as reflected in our mental health report.

The OCC is concerned about the focus of the federal government’s health investments. Our Principles for Effective Pharamacare report urges the government to address outstanding gaps while leveraging the strengths of the existing public-private insurance coverage system and preserving patients’ access to a wide formulary of medications. However, instead of investing to fill the gaps in existing coverage, Budget 2024 provides funding only for contraceptive and diabetes medications – for which the vast majority of Canadians already have coverage.


The Budget includes a series of measures aimed at improving talent supply, skilling opportunities and encouraging labour force participation. Most notably, this includes:

  • $50 million or the Foreign Credential Recognition Program to streamline credential recognition in key economic sectors like construction and healthcare.
  • $18.9 million to eliminate the credit screening requirement for mature students applying for Canada Student Grants and Loans for the first time.
  • $207.6 million to create more work-integrated learning opportunities for post-secondary students.
  • $351.2 million for the Youth Employment and Skills Strategy to create 90,000 youth job placements and employment support opportunities.
  • $1 billion Childcare Expansion Loan Program to offer low-cost loans, grants and student loan forgiveness to expand childcare across Canada.

OCC Analysis: We welcome the funding measures to strengthen the workforce, especially work-integrated learning opportunities for post-secondary students and foreign credential recognition for workers in key economic sectors like construction and healthcare. We are also pleased to see the announcement in support of childcare expansion, which is an important determinant of women’s labour force participation, as outlined in our She-covery Project report.

At the same time, we call on the government to take further targeted actions to future-proof our talent supply as outlined in our 2024 Federal Pre-Budget Submission. This includes initiating a constructive dialogue with provinces, territories, and educational institutions to establish clear guidelines related to the international student study permit cap and reforming Employment Insurance to reflect the needs of today’s workforce. Similarly, for childcare expansion efforts to succeed, the government must address the operational funding shortfall that daycare operators face under the current federal-provincial agreement, which caps the fees operators can charge, putting existing childcare spaces at risk of closure.

Interprovincial Trade

Budget 2024 announces the launch of the first-ever Canadian Survey on Interprovincial Trade to identify challenges businesses face when buying, selling, and investing across provincial and territorial borders. The survey’s insights will help identify and remove key interprovincial barriers and increase labour mobility.

OCC Analysis: The OCC supports the government’s announcement to launch the Canadian Survey on Interprovincial Trade. This initiative will be vital in boosting long-term economic growth and avoiding a patchwork of regulations across provinces and territories that are costly and complex for businesses to navigate. This work builds on the recent move to establish a Canadian Internal Trade Data and Information Hub. Together, these measures are critical to fostering collaboration among all provinces and territories and boosting productivity.

Small Business and Entrepreneurship

Budget 2024 announces several investments in Canada’s growing business and SME ecosystem, including:

  • $200 million to increase access to venture capital for equity-deserving entrepreneurs and to invest in underserved communities and outside key metropolitan hubs.
  • $60 million for Futurpreneur Canada to provide young entrepreneurs with access to financing, mentorship, and other business supports to help them launch and grow their businesses.
  • The government’s intention to propose legislated procurement targets for small- and medium-sized enterprises (SMEs) and innovative firms.

OCC Analysis: The COVID-19 pandemic and resulting economic crisis disproportionately impacted Canada’s SMEs and entrepreneurs. Emergency grants, loans, and tax relief programs helped them stay afloat, but challenges remain as inflation, rising interest rates, and labour shortages continue to hamper recovery. The OCC is happy to see the federal government strengthening access to capital for SMEs, especially those from equity-deserving communities, as recommended in our reports Capital is Key, and The She-Covery Project. Procurement is another excellent tool to help SMEs and innovative firms grow, as discussed in our Power of the Purchase Order report.

Creative Industries

The Budget includes a series of measures aimed at supporting Canada’s vibrant and diverse creative industries sector. These include $31 million for the Canada Arts Presentation Fund to help support organizations that professionally present arts festivals or performing arts series; $23 million for the Toronto International Film Festival; and $15 million for the Shaw Festival Theatre in Niagara-on-the-Lake, Ontario.

OCC Analysis: The creative industries sector continues to grapple with slow recovery, and struggles to regain pre-pandemic momentum.With business confidence outlook at a historic low of 14 percent for these industries in Ontario, according to the OCC’s 2024 Ontario Economic Report, the OCC welcomes the federal government’s investments.

Fiscal Outlook

Budget 2024 allocates $53 billion in new spending over five years, with significant investments in housing affordability, technology infrastructure, and economic reconciliation, alongside additional measures to draw an estimated $19 billion in new taxation revenues.

The deficit for 2023-24 is reported at $40 billion, a slight improvement of what was forecasted in the 2023 Budget, mainly due to a stronger-than-expected economy. In light of recently announced spending measures, deficit projections are increasing from the levels outlined in last year’s budget, with no direction towards balancing the budget. The deficit is projected to modestly improve to $39.8 billion in 2024-25, and be cut by almost half ($20 billion) by 2028-29, offset through increased taxation revenues.

The budget notes progress made in alleviating the debt burden, with the net debt-to-GDP ratio in 2023-24 decreasing from 43.5 percent to 42 percent. This measure indicates the government’s debt burden in relation to its capacity to repay the debt. The ratio is forecasted to reach 41.2 percent in 2024-25 and 37.6 percent in 2028-29.

The economic outlook is mostly positive, with the economy performing better than expected, avoiding a predicted recession. Real GDP growth is projected to be around 1 percent in 2024, increasing to 1.9 percent in 2025. Unemployment is expected to increase to 6.3 percent in 2024-25 but will remain below historical averages, and inflation is anticipated to decrease to 2 percent by the end of 2024-25.

OCC Analysis: Despite challenges such as shelter price inflation, uncertainty surrounding interest rate cuts, and geopolitical tensions, data on economic growth and inflation this year highlights that the Canadian economy is on track for a soft landing.

The federal government is spending aggressively and funding that spending in part through higher personal taxes. While the OCC welcomes the new investments in housing, technology infrastructure, and economic reconciliation, we urge the government to make choices in its spending – prioritizing measures that boost productivity – rather than defaulting to tax increases, which could risk impeding Canada’s economic progress.

What’s Missing

We would have liked to see more action in Budget 2024 on life sciencesbroadband, and Employment Insurance reforms.

On the life sciences front, there has been limited engagement with industry or renewed investment to support the ongoing rollout of Canada’s economic and future source of productivity growth in the sector. To maintain Canada’s status as a world leader in life sciences innovation, we call on the government to renew funding for Canada’s Biomanufacturing and Life Sciences Strategy, and create new funding streams to encourage innovation and high-risk ventures, working with stakeholders to review approval processes, and enhancing regional collaboration.

Broadband infrastructure is also necessary to ensure Canadians across the country can access goods and services and help businesses boost their productivity. To meet the federal government’s goal to connect all Canadians to high-speed internet by 2030, we call upon the federal government to coordinate broadband investments with the private sector to avoid duplication and maximize the impact of public programs, enhance redundancy resiliency within broadband networks, collaborate with provinces and territories to establish future federal goals for broadband connectivity, assess opportunities for promoting competition and private sector investments in the sector, and expedite funding commitments while improving coordination with stakeholders to address gaps in private sector expansion plans.

Finally, implementing broad Employment Insurance reform is necessary to support the needs of today’s workforce. EI reform should ensure the governance, programs, policies, and operations are viable and sustainable, responsive and adaptable, non-partisan and inclusive and relevant for current and future generations of Canadian employers and employees.


Source: Ontario Chamber of Commerce

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