TOP News

Canada: Expect billions more in social spending, housing and defence in today's budget

Budget 2022: Tax-free savings account coming for first-time homebuyers

  Budget 2022: Tax-free savings account coming for first-time homebuyers The 2022 federal budget had a host of housing announcements, including a new tax-free savings account for first-time buyers and plans to ramp up the pace of building. The Liberal government is planning to spend $10.14 billion on housing over the next five years in its 2022 federal budget, looking to make homes more affordable by expanding supply and helping young Canadians save for their first home.

Finance Minister Chrystia Freeland, following decades-long tradition, tries on a pair of shoes to be purchased ahead of delivering the 2022 federal budget. © Provided by National Post Finance Minister Chrystia Freeland, following decades-long tradition, tries on a pair of shoes to be purchased ahead of delivering the 2022 federal budget.

In her new budget, Finance Minister Chrystia Freeland will have the difficult task of combining costly election platform promises, increased spending for defence to meet NATO’s targets as well as enough social spending to make sure the New Democrats are happy.

At the same time, she will have to make sure to keep a decreasing debt-to-GDP ratio, the Liberals’ core fiscal anchor, to demonstrate that Canada’s finances are sustainable.

Conservatives blast Liberal budget as NDP strives to balance criticism with support

  Conservatives blast Liberal budget as NDP strives to balance criticism with support Conservative interim leader Candice Bergen said Thursday that Canada's most pressing problems aren't addressed in the new federal budget — which she claimed had been heavily influenced by NDP ideology. "We were looking for controlled spending, which would in turn control inflation," Bergen told reporters outside the House of Commons after the budget was tabled. "It is an irresponsible budget. It is a typical, classic, NDP spend-and-tax budget.

Even though revenue is expected to be higher than anticipated due to increased oil prices and the cost of living that is driving more GST into the government’s coffers, experts are skeptical that all that heavy spending — some of which will be recurrent for a number of years — can go on without unintended economic consequences.

“If I was an adviser, I would say do no harm,” said Robert Asselin, former advisor to Bill Morneau and senior vice-president of policy at the Business Council of Canada.

“You have the Bank of Canada, which is trying to put the brakes on the economy and bring inflation down. If, on the other hand, you’re just adding more and more in the economy in the short term, you are adding more fuel to the fire and you will probably accelerate the rate hikes … and so you’re being counterproductive, in a way, for the economy.”

COMMENTARY: Budget 2022 comes ‘nowhere close’ the Liberals’ lofty rhetoric on defence spending

  COMMENTARY: Budget 2022 comes ‘nowhere close’ the Liberals’ lofty rhetoric on defence spending Despite the Liberal government's earlier hints of a funding boost, Budget 2022 means Canada's defence spending will be only 1.5% of GDP by later this decade, Jeffrey Collins says. The rhetorical flourish during the lead-up to Thursday's federal budget was more ambitious than the actual announcement. It will be recalled that Russia’s unprovoked full-scale invasion of Ukraine in February upended global stability and forced many of Canada’s allies, especially those in the 30-member North Atlantic Treaty Organization, to confront the very real prospect of nuclear war and years of violent instability on the European continent.

In a recent interview, Mostafa Askari, chief economist for the Institute of Fiscal Studies and Democracy (IFSD), agreed that inflation will have a “very short term impact” on the positive side for revenue, but he stressed that this positive news could be offset by “any sort of weakness” in the economy, whether it be the result of higher prices or war in Europe.

But those calls to fiscal prudence did not shake the Liberals’ imperturbable conviction that it is best to “invest” in Canadians directly to drive the economy.

“We have always been fiscally responsible,” said Prime Minister Justin Trudeau to reporters in French as he was arriving at the Liberal caucus on Wednesday morning. “The choice we made since the beginning of the pandemic to invest to support Canadians, support small business, support families has resulted directly in a faster economic and jobs recovery.”

Promising more fiscal restraint, Freeland tables a lower-spending budget focused on housing

  Promising more fiscal restraint, Freeland tables a lower-spending budget focused on housing Finance Minister Chrystia Freeland tabled her second federal budget Thursday — a multi-billion dollar plan meant to help the country weather increasingly uncertain times through major investments to cool Canada’s red-hot housing market and supercharge the transition to a cleaner, greener economy. Freeland signalled the days of eye-popping 12-digit budget deficits are coming to an end and promised a return to greater fiscal prudence now that the immediate threat of COVID-19 has abated.

“We have a lot to do, still, with the pandemic,” added Mona Fortier, president of the Treasury Board. “We have shortages in the workforce, so we really have to continue to invest.”

Liberals promised $78 billion in five years in new spending in their election platform last fall — which included $25 billion in targeted amounts for health care for provinces and territories and a $15-billion plan to help first-time homebuyers and to build new affordable homes in hopes of solving the housing crisis.

After the fall economic statement, nearly $50 billion of these platform promises had not been budgeted yet. And that does not include the billions that have been added, here and there, to help provincial and territorial health sectors cope with delayed surgeries (an additional $2 billion top up) or to invest in the production of critical minerals for electric vehicles ($2 billion).

The federal government also unveiled more than $9 billion in new spending last week for reducing emissions, with more billions expected for carbon capturing and storage.

Then, there’s defence spending that is expected to ramp up significantly in order to meet NATO’s target of two per cent of GDP. Canada has fallen far below it in recent years, contributing only 1.36 per cent of its target in 2021. And the deal with the NDP will add more social spending to the mix, with investments in a dental care program expected as soon as this year.

The fall economic statement expected a deficit of $58.4 billion in the upcoming year, with the federal debt representing 47.3 per cent of the GDP. That number is expected to go down over time as projected, which could be sustainable, according to Askari, unless another very expensive program promised to the NDP, such as pharmacare, is added to the mix.

“That is the one that is going to get you into trouble in terms of long term sustainability.”

Roughly one-third of Liberal cabinet ministers own rental, investment real estate: records .
While fully legal, real estate experts say the holdings reflect the degree to which Canadians increasingly view real estate as a financial asset, rather than a place to live. It also comes as recent data from Canadian financial institutions has demonstrated the growing role of investors in fuelling price growth — a trend Deputy Prime Minister and Finance Minister Chrystia Freeland billed this week as an issue of "intergenerational injustice.

See also