|In more than two years, the first federal budget extends Ottawa’s COVID-19 “lifeline” for workers and struggling businesses another few months as it aims to pull Canada through the pandemic once and for all. Clocking in at a bulky 724 pages, this is a highly detailed budget that sets the stage for post-pandemic policy in Canada.
Finance Minister Chrystia Freeland’s first crack at a budget plan is also widely viewed as a pre-election platform with more than $100 billion in new spending over the next three years targeting a wide variety of voters, from seniors and their caregivers to parents and business owners.
The government will need to get at least one opposition party to support it to avoid a pandemic election this spring. Much of the redistributive 'investments' and social spending is right up the NDP's alley, so that should be no problem.
Canada’s net debt is now over $1 trillion for the first time, after a $354 billion deficit for the pandemic year just over. It is expected to keep climbing with deficits of $155 billion this year and $60 billion in 2022-23.
That is driven in part by more than $100 billion in new spending over the next three years, including costs to maintain federal wage and rent subsidies and aid for laid-off workers, until September now, instead of cutting them off in June.
Freeland is also looking ahead to the post-pandemic Canada the Liberals want to see, one with $10-a-day childcare, the ability to produce its own vaccines, national long-term care standards and small- and medium-sized businesses equipped with the workers and technology they need to survive.
It also includes a greener, cleaner Canada, with a promise of more than $17 billion in climate change programs, much of it in the form of incentives to encourage heavy industry to curb their emissions and grow Canada’s clean technology sector.
All of it comes with a pandemic-sized asterisk that things could still change drastically if vaccine supplies are delayed, or they prove not to work that well against emerging variants of the virus. The budget includes alternative scenarios that show where the fiscal picture might go if the worst-case scenarios of the pandemic play out.
Those risks seem even more real as the country is battling the worst wave of the pandemic yet with record hospitalizations and patients in critical care and doctors and nurses repeatedly warning of a health care system on the brink of collapse.
The debt-to-GDP ratio will rise again to 51.2%, up from 49.0% in FY20/21 and just over 31% before the pandemic. However, this year should mark the peak for that ratio before declining below 50% by FY25/26.