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.
OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.
Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.
The change is scheduled to come into force on Nov. 8.
As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.
The program has also come under fire for allegations of mistreatment of workers.
A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.
In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.
The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.
According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.
The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.
Temporary foreign workers in the agriculture sector are not affected by past rule changes.
This report by The Canadian Press was first published Oct. 21, 2024.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
