Finance Minister Chrystia Freeland gave Canadians a snapshot of the country’s finances by unveiling the 2022 Fall Economic Statement on Thursday.
Despite warning of a “mild recession in the first quarter of 2023” and “a high degree of uncertainty” in its economic forecast, the government is promising $30.6 billion in new spending over the next six years.
The costly plan proposes to permanently eliminate interest on federal student debt, tax credits for clean technologies and incoming housing legislation.
“What we’re announcing today is to strike a balance between necessary compassion and support for Canadians, and fiscal responsibility,” Freeland said in the House of Commons.
The federal government is projecting a $36.4 billion deficit in the current fiscal year and forecasting a budget surplus of $4.5 billion by 2027/28.
One of the major takeaways from the economic update is that the Liberals will make Canada Student Loans and Canada Apprentice Loans interest-free forever “including those being repaid.”
The plan will cost taxpayers $2.7 billion over a period of five years with an estimated $556.3 million ongoing cost. Prior to the announcement, student-loans were already interest free until March 31, 2023 due prior pandemic policies.
The government also plans to spend $2.5 billion in targeted support for low and modest income households in the form of an additional GST credit payment up to $467 for people with two children. The Liberals also pledged to provide an additional $4 billion to the Canada Workers Benefit over the next six years to be dished out to Canadians who qualified for the plan in prior years.
On housing, the Liberals unveiled several pieces of legislation they hope to table including the creation of a Tax-Free First Home Savings Account, a doubling to the First-Time Home Buyers’ Tax Credit and a new Multigenerational Home Renovation Tax Credit.
Other initiatives include lowering credit card transaction fees for businesses and more support for provinces hit by Hurricane Fiona in 2022.
The Canadian Taxpayers Federation (CTF) slammed the Trudeau government, claiming the government is spending over budget.
“The government received a boat-load of extra cash from taxpayers and the government is still racking up more credit card bills.” said Federal Director for the CTF Franco Terrazzano.
“Freeland is pinky promising a balanced budget eventually, but even that relies on taking an extra $129 billion from taxpayers.”
The CTF believes the government needs to stop spending and raising taxes amid the inflation crisis.
“Canadians can’t afford gasoline or groceries because the government is spending like crazy and raising taxes,” said Terrazzano.
“Freeland needs to stop wasting so much money and cut taxes now.”
The Montreal Economic Institute (MEI) also chimed in on the economic update on Thursday urging the federal government to return to a balanced budget as soon as possible.
“The federal government should show some humility before taking credit for the reduction of the deficit. It’s not so much due to the responsible administration of public funds, but rather to the dramatic increase in tax revenues thanks to inflation being higher than expected,” said MEI economist Olivier Rancourt.
“Every dollar spent to service the debt is a dollar that will neither serve to fund services nor be returned to Canadian taxpayers. The government has every reason to return to a balanced budget very quickly, before interest rates make it that much harder to do so.”
