Sean Kilpatrick The Canadian Press Federal Finance Minister Chrystia Freeland at a press conference in Ottawa on November 3 last
Faced with a gloomy economic context, Ottawa's room for maneuver is dwindling and deficits are widening, with no prospect of returning to a balanced budget. The Trudeau government still announces a few billion dollars in new spending for the construction of thousands of additional housing units, in its fall economic statement, and uses free measures to calm the rise in the cost of living.
The government's financial management is “responsible,” said Finance Minister Chrystia Freeland, who presented a lackluster economic statement to the House of Commons on Tuesday. Overall, it still puts nearly 13.2 billion in new spending on the table over the next six years. Most are intended to make housing more accessible and affordable in the country.
13.2 billion This is the net amount that Chrystia Freeland is adding to the budget in new spending over the next six years.
In the short term, Canada should escape a recession, the document also indicates, based on forecasts from private sector economists. The budget deficit is expected to remain stable, at $40 billion, for the current year; it was anticipated at 40.1 billion in last March's budget.
However, this does not prevent the horizon from getting darker.
As in its budget last spring, the government still does not anticipate a return to budget balance. On the contrary, even: the deficits will be larger than expected. They will certainly continue to decrease, but at a slower pace. In 2027-2028, the deficit should amount to $23.8 billion, Ottawa now estimates. Last March, he estimated it at 14 billion, or around ten billion dollars lower.
The causes include the deterioration of the economic context, inflation and the high interest rates which weigh on the income and expenditure of the government.
In the chamber, the Minister of Finance, however, insisted on the fact that “Canada maintains the lowest deficit and the lowest debt/GDP [gross domestic product] ratio in the G7”, this one standing at 42.7% for the current year.
The leader of the Conservative Party of Canada, Pierre Poilievre, described Minister Freeland's speech as “disgusting.” He criticized it in particular for the explosion in interest costs on the debt: these should in fact increase from 46.5 billion dollars in 2023-2024 to 60.7 billion in 2028-2029.
< h2 class="h2-intertitre">A charter and billions for housing
The new spending also contributes to keeping federal public finances in the red.
The Trudeau government is notably extending $15 billion in new loan financing starting in 2025-2026 under the Apartment Construction Loan Program, and dedicating $1 billion over three years starting in 2025-2026 to Affordable Housing Fund. Sums too late to respond to the “urgency” of the situation, deplore the New Democratic Party (NDP) and the Bloc Québécois.
In addition, to help municipalities “enforce restrictions on short-term rentals” such as Airbnb, the federal government is providing $50 million in funding over three years starting in 2024-2025. /p>
The Trudeau government is also putting forward a series of measures that will not cost it a penny. Among other things, he will launch the “new Canadian mortgage charter”, a document intended for financial institutions which reminds them of six main principles that they must implement to help mortgage loan holders strangled by the sharp rise in interest rates . This charter is, however, not binding.
Among other measures without associated costs, Ottawa proposes to modify the Competition Act and give it more teeth “to crack down on the abuses of large companies in a dominant position” and thus promote price stabilization. It also plans to support the right to repair by including in the law a clause that would “prevent manufacturers from refusing, in an anti-competitive manner, to provide the means to repair devices and products.”
To absent subscribers: funds intended for the national drug insurance program, which the NDP requested be created before the end of the year and in absence of which the party threatened to tear up its agreement with the Liberals. NDP leader Jagmeet Singh, however, said he was not surprised, since he instead wants “a bill to create the foundation” of this program. “We continue to put pressure on to achieve this,” he said.
For his part, the Bloc leader, Yves-François Blanchet, deplored the “emptiness” of the document. His party wanted in particular emergency measures to combat homelessness and help for seniors.
The billion dollars promised by the Liberals for the establishment of a national program of food in schools has also not been announced.