OTTAWA — The Trudeau Liberals are set to unveil an update on the health of federal finances and its outlook for the economy while facing competing demands on benefits, taxes and economic growth.
It’s a tall order for a document that the Finance Department has signalled won’t include a bevvy of new spending items.
The government outlined its major priorities in the spring budget, such as a national child-care system, said David Macdonald, senior economist with the Canadian Centre for Policy Alternatives.
From a political standpoint, the government doesn’t have a lot of time before the holiday season to promote any new, major measures, Macdonald said. The government will likely wait for next year’s budget for any big spending proposals, he said.
“I don’t think that there’s going to be a lot of actual new policy despite the fact we just had an election,” Macdonald said.
“There’s likely to be very little in there except the deficit figures are smaller, probably.”
The government predicted the deficit for last fiscal year would be $354.2 billion, and nearly $155 billion this year. But federal books could have as much as $10 billion in extra fiscal space helped by higher oil prices, which have also helped push up inflation rates.
Inflation rates that have hit 18-year highs, along with strong growth in employment and the domestic economy, could cause the government to ease up on its platform spending plans, said Stephen Brown, senior Canada economist with Capital Economics.
In a note, Brown wrote that extra spending seems more likely to push up inflation by the time any changes take effect.
“It will be more interesting to see if the government follows through with its myriad policy proposals for the housing market, which included a ban on purchases by foreign investors,” he wrote.
Finance Minister Chrystia Freeland suggested this week that the document would give an outlook on the path of this year’s deficit, and an accounting of new aid proposals that the government estimated to cost $7.4 billion.
Some of those calculations have to do with the effect the Omicron variant may have on case counts, and any subsequent need to tighten public health measures or impose lockdowns to slow the spread of the virus.
Bea Bruske, president of the Canadian Labour Congress, urged Freeland to use the document to spend more on benefits, saying in a statement that there are still thousands of workers who are facing financial uncertainty because of COVID-19.
She also suggested the government could use the document to outline its proposed changes to the employment insurance system, whose long-known shortcomings were exposed by the pandemic.
“The fiscal update must make clear that the federal government is prepared to make investments to make life more affordable and ensure vital services, like EI, are there for people when they need it,” Bruske said.
The Chartered Professional Accountants of Canada said Friday that the government could use the update to detail previously announced tax proposals that are supposed to kick in next year, including one on purchases of luxury cars, planes and yachts, and another on foreign-owned vacant homes.
“Some of the changes are supposed to apply in less than a month,” said Bruce Ball, CPA Canada’s vice-president, taxation.
“We’re looking for some clarity in terms of how that’s going to happen and also some reasonable time frames to allow consultation on the things that are still very conceptual and … time for businesses to adjust.”
This report by The Canadian Press was first published Dec. 12, 2021.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
