The federal budget announced today will double down on green energy with a $67 Billion package of initiatives over the next five years. Green energy manufacturing will see grants of $4.5 Billion over that period and would include the federal contribution to ArcelorMittal Dofasco’s green steel initiative. In her speech, Finance Minister Chrystia Freeland suggested that supply chains in North America are being re-drawn in the face of the China threat. “As a result, our allies are moving quickly to friendshore their economies and build their critical supply chains through democracies like our own. Together, these two great shifts represent the most significant opportunity for Canadians workers in the lifetime of anyone here today,” Freeland said.
For 11 million low- and modest-income Canadians and families, the Grocery Rebate will provide eligible couples with two children with up to an extra $467; single Canadians without children with up to an extra $234; and seniors with an extra $225 on average. This will be delivered through the Goods and Services Tax Credit (GST Credit) mechanism.
Much of the rest of the affordability section was a re-announcement of measures from 2022, including the 10 percent increase in OAS, extra child payments of up to $1,300, the inflation relief payments and the $500 rent subsidy.
The government did announce some non-tax supported cost saving measures including:
- Limiting junk fees (internet overages, roaming fees) through regulatory pressures.
- Lowering interest rates on payday loans and other predatory lending practices
- Lowering credit card fees to small businesses ( the government says major credit card companies have already agreed to cooperate)
- Common charges for all devices, something that has already been implemented in the EU
- Student loan relief, in the form of forgiveness for low income students and grants.
Like the provincial budget last week, the federal budget contains no special COVID relief funding.
On the health care front the government will transfer $23 Billion extra to the provinces over the next five years and $13 billion to provide dental care to low income families, more than double the amount originally planned, and an obvious concession to the NDP to keep the current agreement to support the Liberals in place.
Overall spending will be $457 Billion, with a projected deficit this year of 40 Billion. The projections show declining deficits through to the 2027-28 tax year. The federal debt is currently nearly $1.2 Trillion which is 43.5 percent of GDP. After the large deficit created by CERB during the pandemic, the Employment Insurance account is back in the black and is expected to post surpluses averaging $2 billion per year for the next four years.
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