KAIROS unpacks Budget 2023
Budget 2023 was delivered at a time of high inflation and national debt – and a challenge from Canada’s largest trading partner to step up investment in clean energy.
It was no surprise then that the budget, announced on March 28, invests $80 billion over the next decade in the transition to clean energy. This infusion is an exciting turn of events. In 2021, Oil Watch International reported that Canada invested $11 billion in the oil and gas sector, 14.5 times more support than for renewables.
However, $80 billion is a fraction of what is really needed in Canada’s energy transition (we delve into the devil in the details below) and Canada is still committed to fossil fuel development.
For Indigenous Peoples in Canada and our international partners, Budget 2023 was a big disappointment.
KAIROS’ Programs team unpacks the budget and what it means for our program areas.
KAIROS commends the government for prioritizing efforts to decarbonize the economy in Budget 2023 but is concerned by its reliance on market-based approaches with very little public spending. The budget introduced $56 billion in new corporate subsidies, compared to $4 billion in new direct funding for projects, such as the Smart Renewables and Electrification Pathways Program.
In the report “Spending What it Takes,” researchers conclude that Canada needs to invest $287 billion over five years (an average of $57 billion per year) in new public spending for climate action. This is equivalent to approximately two percent of GDP.
KAIROS supports Canada’s goal to secure 100 percent zero emissions electricity by 2035. The Clean Electricity Investment Tax Credit, a $6.3 billion commitment over four years to support provincial utilities as well as private and Indigenous-owned assets, is a step in that direction, but more significant investments will be needed to achieve the zero emissions goal. The report “Spending What it Takes,” estimates that $20 billion is needed to build a clean electricity grid.
KAIROS urges the government to prioritize investments in low-cost non-emitting electricity generation systems such as wind, concentrated solar, and solar photovoltaic and to make investments available only to projects that have free, prior and informed consent from Indigenous communities.
KAIROS is disappointed that the government did not make the effort in this budget to end fossil fuel subsidies once and for all. Instead, we see a suite of tax credits being introduced that support false solutions to the climate crisis. Many of these tax credits are equivalent to subsidizing the fossil fuel industry, which already received over $20 billion in support from the federal government in 2022, according to Environmental Defense.
Tax credits to support technologies such as carbon capture, utilization and storage (CCUS) are effectively subsidies to the oil and gas industry. Despite decades of research, CCUS is still unproven at scale and expensive. The latest IPCC Synthesis Report demonstrates that CCUS is the most expensive and least effective option for mitigating greenhouse gas emissions.
Furthermore, the Clean Hydrogen Investment Tax Credit does not exclude the production of fossil-derived hydrogen, which is the equivalent of subsidizing fossil gas. There is no agreed definition of “clean hydrogen,” so industry can promote ‘blue hydrogen’ (hydrogen produced from natural gas and supported by carbon capture and storage) as clean despite its greenhouse gas emissions. Even renewable hydrogen requires huge amounts of energy making it less effective than other non-emitting energy sources. There are better investments, such as wind, solar and tidal, than CCS and hydrogen.
KAIROS applauds the government’s commitments in Budget 2023 to create sustainable, well-paying jobs and for making worker training a condition that industry must meet to access the full extent of tax credits. KAIROS urges the government to invest strategically in recruiting and training workers from historically marginalized groups, including women, Indigenous Peoples, and racialized Canadians.
Budget 2023 further supports the government’s commitment to position Canada as a global supplier of critical minerals needed for clean technologies. KAIROS urges the government to support the responsible extraction of these minerals – ensuring that projects have the free, prior and informed consent of Indigenous communities and uphold environmental protections, and that corporations are held accountable.
KAIROS is encouraged by the $2.5 billion in new funding committed to halt and reverse nature loss in Canada, including $800 million for Indigenous-led conservation. However, these amounts do not match the extent of investment needed for Canada to meet its nature protection and biodiversity commitments, as outlined by the Green Budget Coalition
While Canada demonstrated leadership in advancing the UN’s Loss and Damage mechanism at COP27, it dropped the ball in Budget 2023 where it failed to proactively reserve dollars for the mechanism and help pay global climate damage debts. Canada has been active in advancing commitments from high-emitting countries to support communities and countries most vulnerable to climate damage. However, the best way to lead is to lead by example.
Canada’s failure to invest in the climate crisis globally is evident in its cuts to international assistance. By decreasing funding to global partners, particularly women and Indigenous communities, who are currently living and addressing the climate crisis through adaptation and mitigation strategies, the 2023 Budget fails to respond to the global climate crisis.
Moreover, by not prioritizing women and Indigenous and Global South people in its budget, Canada further marginalizes these communities, which contribute the least to the climate crisis, feel the negative impacts the most and are more likely to offer sustainable and effective solutions due to their local knowledge and experience.
Gender Justice and Women, Peace and Security
The Canadian government clawed back its international development assistance in the 2023 Budget, despite calls from civil society and the KAIROS network to do the opposite.
The budget allocates $6.8 billion in international assistance over the next year, a 15 percent cut from 2022, bringing Canada’s percentage allocation of gross national income of 0.32 percent further away from the international standard of 0.7.
KAIROS and other members of Cooperation Canada called on the federal government to go beyond the 2022 budget of $8.15 billion to international assistance and commit to a predictable three-year boost to reach $10 billion by 2025. KAIROS and network have also called on the government to ensure that this funding reaches grassroots women’s rights and peacebuilding organizations, including support for their recovery and transformation efforts in response to the pandemic and is flexible, predictable, and long-term.
This requested increase was in line with the government’s own commitment to realize the United Nations Sustainable Development Goals and to reach the international overseas assistance standard. It would have also increased funding for Canada’s Feminist International Assistance Policy (FIAP), an internationally recognized policy, and demonstrated Canada’s leadership on the world stage.
This decision betrays global partners and local organizations who work with and accompany the most marginalized communities in the world in responding to the pandemic, climate change and growing violence. Nowhere does the budget recognize the central role of women’s organizations and movements around the world in building conditions for sustainable, just and equitable peace and climate justice. There has never been a more important time to support these organizations and movements of transformation and hope than now.
KAIROS networks and supporters sent hundreds of letters to MPs calling for greater support for global partners working for peace and ecological justice.
The 2023 Budget could have been a leadership moment for Canada and a chance to champion FIAP, but instead, it risks abandoning global partners and movements who are working to build an equitable sustainable and peaceful world, eroding the investments we have made so far and undermining the very building block of Canada’s flagship Feminist Foreign Policy.
KAIROS along with 80 civil society organizations in Canada signed a public statement expressing concern: Budget 2023 undermines Canada’s standing in the world, as government backpedals on aid commitment.
For Indigenous communities, Budget 2023 is one more disappointment and evidence that the government is not wholly committed to reconciliation.
The passing of the United Nations Declaration on the Rights of Indigenous Peoples Act in 2021 was an important step forward on Canada’s reconciliation journey. However, this step is compromised without appropriate funding to realize socio-economic equity for Indigenous Peoples in Canada.
In the lead up to Budget 2023, Indigenous organizations urged long-term investments in infrastructure, women, housing, education, health, climate and conservation, skills training and justice programs.
Despite their advocacy, they saw little in new spending to advance reconciliation.
“They’re perpetuating an ongoing third-world condition for many of our communities,” said RoseAnne Archibald, the National Chief of the Assembly of First Nations. “It’s repetitive injustice. It’s a deliberate pattern of harming our communities through underfunding.”
The Assembly of First Nations called for $63.3 billion through 2040 to bring on-reserve housing to levels comparable with Canadians, $20.5 billion for general infrastructure, $4.5 billion for drinking water and wastewater, $10.2 billion for green infrastructure, and $6.9 billion for education facilities, all over five years.
Inuit Tapiriit Kanatami (ITK) requested $75-billion commitment over 35 years for infrastructure in Inuit communities. The Métis National Council hoped for $97 million for Métis businesses, $893 million for a health benefits program and $1.17 billion for development of a Métis education program. And the Native Women’s Association of Canada (NWAC) sought “a baseline level of $15 billion annually” to support Indigenous women, girls and gender-diverse people.
Canada’s budget comes up very short. It will allocate $4 billion over seven years for the Urban, Rural, and Northern Indigenous housing strategy that begins next year. It has also promised $2 billion over 10 years for the Indigenous Health Equity Fund. It will provide additional support for land and environment management, a framework for economic reconciliation, and reducing tuberculosis rates, but figures are in the millions, not the billions requested.
Only $2.5 million was promised to advance an action plan on implementing the 2019 recommendations of the National Inquiry into Murdered and Missing Indigenous Women and Girls.
“A budget is about priorities – and Budget 2023 has failed to make it a top priority to protect and empower Indigenous women, girls and gender-diverse people,” said NWAC CEO Lynne Groulx.
KAIROS calls on Canada to match its good words with concrete actions – specifically to invest the appropriate dollars needed to fully realize reconciliation.
In Budget 2022, Canada recognized the invaluable role newcomers play in the economy and society and acknowledged their frontline role during the pandemic. That year, it pledged to spend more than two billion dollars over five years to address problems in its immigration system, and to add 500,000 new permanent residents by 2025.
Budget 2023 adds $55 million to what has already been committed.
To speed up the processing of citizenship applications, the government will invest in biometrics, providing $10 million over five years with $14.6 million in remaining amortization for Immigration, Refugees and Citizenship Canada and the Royal Canadian Mounted Police.
On the one hand, this news is welcome. For years, KAIROS has urged Canada to expedite permanent residency applications stuck in backlog. Currently, two million applications await review.
On the other hand, biometrics raises red flags concerning privacy and discrimination. Face recognition technology, for example, has been criticized for its inaccuracies with faces that are neither white nor male.
Canada asks applicants for fingerprints and photos. How robust will its biometrics be in mitigating what is referred to as differential impacts? The National Security and Intelligence Review Agency has flagged these concerns, noting that Canada is aware of them.
We also note that supplying a photo and fingerprint comes with a price. Biometrics fees are $85 per person and $170 per family. This is one more cost and logistical challenge that many migrant workers may not be able to afford or accomplish.
Of note, Budget 2023 also proposes $6.9 million over two years to “drive cultural change in the public service.” This includes a process review that addresses harassment, violence and discrimination complaints. We hope that this will further support migrant workers in reporting work-related abuses.
The budget also proposes $16 million over three years for the Women’s Program to fund organizations that serve women, particularly from traditionally marginalized communities, including migrant women. It will also invest $43.5 million this budget year to immigration and refugee legal aid services for asylum seekers unable to pay legal support.