Budget offers little new relief for middle-income Canadians

OTTAWA — The latest federal budget promises billions of dollars in affordability relief, but middle-income Canadians struggling with the cost of living may find little new immediate help in the spending plan.

While Ottawa earmarked fresh assistance for lower-income households in Budget 2026, families with earnings above income-tested thresholds may be iced out.

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For example, the budget offers a one-time grocery benefit top-up of up to $339 for singles and $679 for a couple with two children, but the payments are phased out as household income rises.

The budget also proposes expanding the Canada Workers Benefit for low-income workers, increasing maximum annual payments by $150 to $1,859 for individuals and by $200 to $3,143 for families.

For middle-income Canadians struggling with housing costs, utility charges and high grocery bills, the government is banking on longer-term economic growth to boost wages and purchasing power.

Economists say that while the approach offers little immediate relief, encouraging business investment and productivity can improve living standards over time.

“If you really want to make a dent in the standard of living and improve affordability for middle-income Canadians, you have to work on the economy,” said Alexandre Laurin, vice-president and director of research at the C.D. Howe Institute.

“You want to raise productivity, you want to raise people’s wages,” he said. “That’s what’s going to deal with the affordability concern in a sustainable way.”

Laurin said targeted low-income benefits are a more affordable way to help those most in need.

Broader financial relief through new tax cuts or universal programs would be difficult to sustain given Ottawa’s fiscal constraints, he said.

For example, Ottawa extended the temporary suspension of the federal excise tax on gasoline and diesel ahead of the budget. This provides relief at the pumps regardless of household income.

Ottawa estimates the extension will cost an additional $2.9 billion, bringing the total cost of the measure to $5.3 billion in 2026-27.

“The suspension of the excise tax on gasoline is very expensive,” Laurin said. “Everyone gets relief.”

A report released last month by the office of Parliamentary Budget Officer Annette Ryan found that higher-income families benefit most from the temporary suspension and subsequent reduction of federal fuel excise taxes.

“The estimated benefit of the measure increases with family income, ranging from $132 per family in the lowest quintile to $468 per family in the highest quintile, as higher-income families tend to consume more fuel,” the budget watchdog said, noting that the estimated savings cover the period from April 20, 2026, to March 31, 2027.

Statistics Canada uses “income quintiles” to divide families into five equally sized groups ranked from lowest to highest income, with each group representing 20 per cent of families.

Meanwhile, financial pressures persist for many Canadians struggling to cover everyday expenses.

An Abacus Data survey released this week found that nearly two-thirds of respondents identified the cost of living as a top concern.

Against that backdrop, Ian Lee, associate professor at Carleton University’s Sprott School of Business, warned that Ottawa’s reliance on longer-term investment and economic growth carries risks.

“It’s a gamble because if the investments don’t materialize or they don’t produce the growth that (Prime Minister Mark Carney) is projecting, then there’s going to be some angry people down the road if incomes stagnate,” Lee said.

“That’s the bet I think he’s made. He’s going to look after the low-income people who are the most squeezed … and then everybody else he’s going to bet for medium- and longer-term growth in the economy through this flood of capital investment.”

Read more:

• Canadian food bank use hits 2.3 million monthly visits due to grocery costs: report
• Sask. premier comments on federal budget, DEED, AI data centres
• Higher gas prices drove inflation up to 3.1% in September: StatCan