Canada’s debt: Highlights from the fall economic update

OTTAWA — The federal Liberals released their fall economic update on Thursday — a 92-page mini-budget outlining Canada’s fiscal situation and outlining new policies to tackle cost-of-living issues.

The word “inflation” appears more than 100 times in the document, clearly indicating the government’s primary economic concern.

But beyond the debt projections and analysis of how Canada seeks to mitigate the impact of a possible recession, the fiscal update offers key details that highlight Liberal priorities.

Here’s a look at five highlights.

Fiona’s relief

The Liberals expect to spend $1 billion in the current fiscal year to meet provincial demands related to post-tropical storm Fiona, which tore through Atlantic Canada and eastern Quebec in late September.

This figure is in addition to the $300 million over two years the federal government announced in early October following the devastating storm, and its month-long matching donations to the Canadian Red Cross.

The new funds are expected to cover provincial requests under the Disaster Financial Assistance Agreements, under which the federal government covers up to 90% of eligible provincial expenses within three months of a disaster.

Infrastructure financing

In last spring’s budget, the government promised $33.5 billion for public infrastructure projects across the country. The fall statement says $23 billion has been approved so far for 5,200 projects submitted by provinces and territories.

While the territories have until March 2025 to allocate the money, the provincial deadline is March 2023 or the money will be reallocated.

Alberta and Manitoba are down to one percent of their funding envelopes, which is $50.5 million and $13.6 million respectively. And while Ontario used all but four per cent, that’s still a significant amount of money at over $450 million.

At the other end of the spectrum, Quebec is the biggest laggard, with 37% of its envelope or $2.75 billion still available. Next is the $661 million from British Columbia, which represents 17% of its share.

Among the Atlantic provinces, Newfoundland and Labrador still has 38% or $213 million; Nova Scotia has 31% or $259 million; New Brunswick has 17% or $113 million and Prince Edward Island has 16% or $57 million.

Cryptocurrency consultations

The financial statement contains an announcement that consultations are being launched immediately — the same day as its Thursday release — on digital currencies “including cryptocurrencies, stablecoins and central bank digital currencies.”

Canada’s fiscal framework must keep pace with rising currencies and how the digitalization of money is “transforming financial systems in Canada and around the world,” the document says.

And the government is also seeking to understand the challenges that digital currency poses to democratic institutions, with certain types of crypto being used to evade global sanctions and fund illegal activities.

The new consultations follow a legislative review announced in last spring’s budget. They also come on the heels of attacks on new Conservative leader Pierre Poilievre for his suggestion during the Conservative leadership campaign that cryptocurrencies could help Canadians ‘treat out’ of inflation – a claim the Liberals ridiculed after the fall in value of cryptocurrencies earlier this year.

In a separate process, the Bank of Canada has been exploring the potential for a central bank digital currency. He said he doesn’t foresee the need for it at the moment, but wants to be ready if that changes in the future.

Truckers’ rights

Individual truckers may have formed the genesis of the ‘Freedom Convoy’ protest that swept through Ottawa last winter and prompted the Liberals to use Liberal emergency powers to weed out protesters – a move currently examined in a highly publicized public inquiry.

But the Liberals are signaling their support for the industry with their mini-budget, allocating $26.3 million over five years for orders, fines and lawsuits against non-compliant trucking industry employers.

The money is aimed at solving the lingering problem of companies that have truck drivers who self-incorporate and operate as independent contractors instead of being classified as employees. This denies them work rights, including paid sick leave, health and safety standards, and employment insurance and pension contributions, the document says.

The Canada Revenue Agency is also working to “encourage greater awareness” and “foster compliance” with the tax rules that govern the use of incorporated employees, which the federal government says it will develop in next spring’s budget.

Immigration assistance

The fall statement unveils the amount of funding the Liberals expect to spend on a new immigration strategy they unveiled earlier in the week.

On Tuesday, the government announced it would seek to increase immigration to record levels, bringing 500,000 arrivals in 2025. The Liberals predict the majority will be skilled workers who can help fill labor shortages works in the health care, manufacturing and building trades.

Supporting the processing and settlement of new permanent residents will cost $1.6 billion over six years and $315 million in ongoing new funding, according to the fall statement.

As the Liberals are criticized for bottlenecks in Canada’s immigration process, an additional $50 million will be paid to the Department of Immigration in the current fiscal year “to deal with the backlog of applications in course, expedite processing and allow skilled newcomers to fill critical labor shortages more quickly.”

This report from The Canadian Press was first published on November 3, 2022.

Source link

John A. Bogar