This article and lesson plan help students examine the highlights and features of the 2023 Budget and assess its impact, strengths and weaknesses – as well as exploring which groups may be happy, or unhappy, with the Budget and why.

Finance Minister Chrystia Freeland brought down her 2023 Budget and it will directly impact on the financial lives of many Canadians in a variety of ways.

This lesson plan also refers to an associated article by Erica Alini “From flood insurance to alcohol taxes, how the 2023 budget affects Canadians’ wallets.”

The Budget forecasts a deficit of $40 billion for the coming year. It is a Budget that has proposed measures that target some key voting groups including: first time home buyers, wealthy Canadians, investors in clean energy, and lower income Canadians. That’s a pretty broad spectrum of Canadians.

Post the Covid years, it is a Budget that aims to strike a positive note. It remains to be seen whether the Budget and what it is proposing can move the sentiment of Canadians’ away from the challenges of the Covid years to more positive years ahead.

Appropriate Subject Area(s):

Economics, politics, social studies, role of government

Key Questions to Explore:

• What is a federal budget?
• What were the highlights of this particular Budget?
• How does the Budget affect various groups of Canadians?
• Which groups are likely to be happy, or unhappy, with the Budget and why?
• What do students think of the Budget in terms of strengths and weaknesses?

Possible New Terminology:

Federal Budget, Budget surplus, Budget deficit, federal debt, and tax credit.

Materials Needed:

• Computer to access the link to the article
• Copies of the Background Reading
• Handouts #1, #2, and #3

Introduction to the Lesson: Background Reading

The Federal Budget basically charts the government’s course for its fiscal policy – that is, taxing and spending activity. When a government takes in more revenue than it spends, it incurs a budget surplus. When its spending exceeds its revenue, the government incurs a deficit. Deficits and surpluses are annual – that is, what happens over the course of a year. The debt is the total amount that a government owes – that is, the total amount of debt accumulated over all past years of surpluses and deficits. The federal government currently has a debt of over $1.2 trillion – see http://www.debtclock.ca/ for the up-to-date level of federal debt. This amounts to over $34,000 for each Canadian.

Canada’s debt has increased over recent years. – impacted significantly by the economic effects of Covid. This is a contrast to what the Liberal government had originally hoped to achieve. The Liberals had stated that they hoped to achieve a balance budget by 2027-2028 but, rather than a balanced budget, the budget deficit is projected to be about $14 billion for that year.

Reducing debt is usually good for an economy as it reduces tax money that has to be used for interest payments, frees up money to be used on other things, and reduces the burden of debt that is put on future generations. However, the Covid crisis that hit in 2020 led to some years of deficit spending to boost the economy and help it – and Canadians – recover from the crisis.

In some respects, it is understandable why Canada has continued to run a federal deficit.

A number of global events in recent years have made it difficult for Canada’s economy to fully recover from those Covid years – supply chain challenges, the war in the Ukraine, rising rates of inflation and, consequently, rising interest rates. For some Canadians, the difficult economic times continue. Rising rates of inflation have certainly impacted many Canadians and Canadian businesses, but other factors are impacting the economy and hence the lives of Canadians – factors such as the economic slowdown in China, the tensions between the U.S., China, and Russia, instability in the Middle East, the challenges posed by massive global migration of people resulting in border tensions (e.g. U.S./Mexico border) and resettling refugees (such as those from Afghanistan and the Ukraine), and political uncertainty in the U.S. (i.e. Trump).

The general feeling, even among most economists, is that Canada’s economy still requires some years of fiscal stimulus to help boost production, protect or increase jobs, and help sustain or improve incomes for Canadians. At the same time, challenges have faced the Bank of Canada as it has had to raise interest rates to help control, and hopefully reduce,  inflation back to the desired target range around 2%.

The articles for this lesson will help you to explore the areas on which the government is now planning to spend money, or increase spending. You can consider whether you support the areas of spending planned and if you think the deficit is appropriate or not. You will learn more about the groups that are likely to be pleased with the Budget, those that may not, and those that are luke-warm, thinking it could have been better.

For youth, there will likely be interest in the changes in the Budget for first time home buyers and a dental plan for those on low incomes.

As some added learning, here’s a little on the Debt/GDP Ratio. Previous governments, for some time now, have focused on deficits and trying to get the annual federal deficit down – or even move the government into a surplus position. The Trudeau government changed that focus somewhat and focused more on the Debt to GDP ratio. The government has committed to keeping the Debt to GDP ratio stable or reducing it over the coming years.

What is the Debt to GDP ratio? To better understand this statistic, please see the Handout that has been prepared for this lesson.

The lesson will have students take a look at what a Budget looks like, review the key measures outlined in the Budget, summarize highlights, and discuss/debate the position of the federal government and what its economic priorities appear to be – and what students think they should be.

Action (lesson plan and task):

• Prior to the class, distribute the Background Reading and ask students to review the articles at the link provided. Ask them to read the articles. In addition, ask them to go online to the Government of Canada website – canada.ca – and find the Budget and quickly scan other highlights they might note and take a quick look at the Budget. Ask students to prepare a summary of the key highlights from the Budget and to identify groups that they believe should likely be happy with the Budget and others who may be unhappy and why.
• At the start of the class, ask students to provide you with examples of the kinds of things they saw in the Budget. What was of interest to them? Did anything surprise them? Make a list on the board of the general topics that came up in the Budget – e.g. policies or steps to affect youth, student loans and grants, youth employment and employment in general, taxes, indigenous people, seniors, etc. Create a general list illustrating the kinds of things that come under the federal government’s jurisdiction and the areas for spending that the government targeted in the current Budget.
• Next, discuss with students the groups in Canada that they identified that they believe are likely to be happy with the Budget, as well as those that could be unhappy. Make a list of each group category and the groups that fall within each.
• Ask if they noticed what Canada’s total federal debt is. If no one knows, ask the class what they think our national debt is. Share with them the current federal debt that can be found at http://www.debtclock.ca/.
• Use Handout #1 (provided) and review with students what a Budget is and the concepts of Budget surplus and deficit. Use the equation for total demand to show how government spending can help boost an economy when it is needed.
• But also note that if governments don’t run a surplus in some years to help bring down the debt, the debt just continues to rise.
• Discuss with students how this can lead to one generation passing debt on to another. The debt has to be repaid – and interest payments on large levels of debt are very high – and this also adds a cost burden to future taxpayers.
• Note that the current government has focused more on a statistic called the debt-to-income ratio. Use Handout #2 to help students understand this statistic and its importance.
• Divide the class into four groups. Designate one group as being Liberal, one group as being Conservative, one group as being NDP, and one group as the Green Party. Inform each group that their challenge is to prepare a presentation for the class providing 10 reasons why this is a good Budget (the Liberal group) and ten reasons why it is not a good Budget (the Conservatives), and five reasons why it was good and five reasons why it was bad (the NDP and Green parties).
• Provide the rest of the class time for the groups to discuss the challenge and ask them to be ready to make their presentation during the next class. Each class should prepare copies of Handout #3 for the rest of the class which presents a summary of their 10 points.
• Provide an opportunity at the next class for the groups to share their 10 points on a handout and a presentation.

Consolidation of Learning:

• Once the presentations are complete, ask students to drop their party affiliation and discuss as a class the best points made for or against the Budget. Make a summary of the best points for and against and discuss the quality of the Budget as a class.

Success Criteria:

Students should be able to:

• describe the purpose of a federal budget
• distinguish between a budget deficit, budget surplus, and government debt
• explain why a government might run a budget deficit
• explain the consequences of a growing national debt
• explain the concept of debt-to-GDP ratio and the importance of this statistic
• review the highlights of a government budget and offer opinion as to the merits and shortfalls of the Budget

Confirming Activity:

• At the time of the next budget presented by the government in their province, ask the students to undertake a quick review and offer a personal assessment based upon what they have learned in this lesson.