The new spending has increased the fiscal year’s deficit to $52.8 billion from earlier estimates of $44.1 billion.
Government officials framed the spending as a hedge against near-term economic uncertainty created by Russia’s unprovoked invasion of Ukraine and the sixth wave of the COVID-19 pandemic.
But the Liberals also say the spending is aimed at the long-term as well to address structural issues within the national economy that could hold back growth in the long-term.
It’s why the government is reprofiling $15 billion in existing spending for a new fund designed to lower business investment risk for research and new technologies, $3.8 billion over eight years for a critical minerals strategy, and $450 million over five years to unclog supply chains.
The document also commits to spending money from budgets past by forcing provinces to allocate nearly $7.3 billion in outstanding infrastructure dollars by next March or risk losing the money. Timelines to spend the money have also been pushed back from 2027 to 2033.
Overall, the budget points to a government admitting there are hurdles to Canada’s long-term growth prospects, though falls short of a detailed economic strategy, said Robert Asselin, senior vice-president policy with the Business Council of Canada.
The budget forecasts 3.9 per cent economic growth this year but expects that to slow over the ensuing four years to average 2.9 per cent annual growth in real gross domestic product. Inflation too is expected to fall from 3.9 per cent this year – an upward revision to December’s fiscal update – before starting next year to fall toward the Bank of Canada’s target of two per cent.
Unemployment is expected to stay at a low of 5.5 per cent over the forecast horizon.
Economist Armine Yalnizyan, an Atkinson Fellow on the Future of Workers, said the budget was a missed opportunity invest in health-care workers — for example, to keep workers from leaving the care economy that accounts for one-fifth of GDP, and which other workers rely on.
Total spending is this fiscal year will decline to $452.3 billion, including debt servicing costs, from the $497.9 billion in the preceding 12-month period as emergency pandemic aid measures end.
Even with the emergency spending, the budget forecasts the debt as a percentage of the economy will hit 45.1 per cent this year and decline over the coming years, including in a worst-case scenario envisioned in the document.
Randall Bartlett, senior director of Canadian economics at Desjardins, said the government has put some of its financial windfall into the bank for a rainy day given the uncertain environment, and held back on moving ahead with a handful of election promises in this budget.
To pay for some of the new spending, the government is rolling out a tax on excess profits at banks and insurance companies that the Finance Department expects to reel in $6.1 billion over five years. There is also a warning shot to the country’s top earners that the government plans to change their minimum tax with details later this year.
The Liberals are also promising a spending review to find $6 billion in savings over five years. A progress report is promised for next year’s budget.
Here are some of the highlights from the 2022 budget:
— $452.3 billion in new spending on projected revenue of $408.4 billion for a deficit of $52.8 billion. The debt to GDP ratio is pegged at 45.1 per cent.
— $4 billion over the next five years to launch a new fund in the Canada Housing and Mortgage Corporation to help cities and municipalities create more affordable housing, and $1.5 billion over two years to the CMHC’s Rapid Housing Initiative to create 6,000 new affordable housing units with at least one-quarter of the funding dedicated to women-focused projects.
— $625 million over four years, starting in 2023-24, for child care, to help the provinces and territories build new facilities and make new investments. The new funding is a followup to the various federal child-care agreements with the provinces and territories after they raised concerns that non-profit and public providers were facing soaring real estate and building material costs.
— $1 billion over five years, starting in 2022-23, to create an independent federal innovation and investment agency. The measure is designed to spur economic growth and address the fact that Canada is ranked last in the G7 in spending on research and development by business.
— The defence budget got new money with more than $8 billion pledged over five years to better equip the Canadian Armed Forces, reinforce cybersecurity and support a culture of change. The budget contained no road map on whether this would be enough to boost Canada’s defence spending to the NATO target of two per cent of GDP, as the alliance works to bolster Europe following the Russian invasion of Ukraine.
— Up to $1 billion in new loan resources for the Ukrainian government through the International Monetary Fund to help keep its embattled government operating.
— $4 billion over six years, starting in 2021-22, to remove systemic barriers to First Nations children receiving services in health, education and social services. The funds are part of the government’s commitment to Jordan’s Principle, which started in 2016.
— $5.3 billion over five years starting in 2022-23 and $1.7 billion ongoing to Health Canada to provide dental care to Canadians as a result of the Liberal-NDP agreement. The plan will start with children under 12 in 2022 at an initial cost of $300 million.
— $1.7 billion over five years starting in 2022-23 to help make zero-emission vehicles more affordable for people. The Canadian Infrastructure Bank will spend $500 million over five years to build infrastructure to support the 1,500 charging stations that the government has promised to build throughout Canada.
— $547 million over four years starting in 2022-23 to help businesses upgrade their fleets to zero-emission vehicles.
This report by The Canadian Press was first published April 7, 2022.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
