Federal Government Delivers Fall Economic Statement
November 30, 2020
Today, Canadian Finance Minister Chrystia Freeland delivered the 2020 Fall Economic Statement (Full Text
). The Fall Economic Statement is a confidence vote, but is different than a full budget where many of the details announced today will be revealed.
“Mr. Speaker, this is the most severe challenge our country has faced since the Second World War. It is our most severe economic shock since the Great Depression, and our most severe public health crisis since the Spanish Flu, a century ago. Canadians should know that their federal government will be there to help them get through it – come what may.”
The statement laid out the governments best and worst case deficit projections. In July, the federal deficit was projected to reach $343.2 billion and will now increase to $381 billion in a best case scenario. If cases continue to surge resulting in additional lock downs or restrictions, the deficit could increase to $398.7 billion in 2020-21 in a worst case scenario. The federal government has hinted at a new tax on “multinational” web giants and that all Canadians should pay their fair share. Beyond that there were no mention of specific tax increases or plans to return to a balanced budget following the pandemic.
The deficit target for 2025 is currently $25 billion and much lower than current figures. In the short term, the government will rely on historically low interest rates and lower debt servicing costs. The federal government predicts a debt-to-GDP ratio of 50.7% in 2020-21. That is favourable compared to other G7 nations but does not consider the financial state of the provinces.
The federal government will also spend $100 billion in additional stimulus over three years. It was hinted that details around a National Child Care plan would be funded from this stimulus package, among other priorities outlined in the Fall Economic Update and September Throne Speech.
The speech highlighted measures already taken to fight COVID-19, noting that "eight of every ten dollars spent in Canada to fight the virus and support Canadians has been spent by the federal government.
" Some of the highlights included CERB, funding for PPE, testing capacity, vaccine procurement, the Safe Restart Agreement, commercial rent support, interest free business loans and the Canada Emergency Wage Subsidy. In total, $322 billion was spent in measures to fight the virus and support people through the pandemic.
It is proposed that the Canada Emergency Wage Subsidy through to June of 2021. A new fund will also be set up for hard hit industries including the tourism and airline sectors. Premiers had asked for an increase in health transfers. This request was not mentioned in the speech and could result in huge deficits at the provincial level as seen in the 2020 Ontario budget. $1 billion was announced for a safe long-term care fund for the provinces and territories, making new investments in PPE and preparing for vaccination mobilization. Health care spending will continue to be a high priority during the pandemic.
Messaging around National Child Care was highly anticipated and included in the speech:
“COVID-19 has been especially hard for young children and their families. We know that many middle class families are struggling. So, to provide immediate relief for families with young children, our government proposes to introduce temporary additional support totaling up to $1,200 in 2021 for each child under the age of 6 for low- and middle-income families who are entitled to the Canada Child Benefit (CCB).
Mr. Speaker, we know that COVID-19 is rolling back many of the gains Canadian women have fought for and won in my lifetime.
That is why today, as part of our commitment to an Action Plan for Women in the Economy, we are laying the foundation for a Canada-wide early learning and child care system. Just as Saskatchewan once showed Canada the way on health care and British Columbia showed Canada the way on pricing pollution, Quebec can show us all the way on child care.
I say this both as a working mother, and as a Minister of Finance: Canada will not be truly competitive until all Canadian women have access to the affordable child care we need to support our participation in our country’s workforce.
This is a feminist agenda, Mr. Speaker, and I say that proudly. It is also an agenda that makes sound business sense and is supported by many of Canada’s corporate leaders – people who have witnessed first-hand the toll this crisis has taken on women, their families and our children. We can only all do better when every one of us is contributing to our full potential.
As we build back, we have it within our reach to build back better, tackling challenges that hold us all back: Homelessness. Systemic racism. The unfinished and essential work of Reconciliation.”
As a “down payment” on national child care, the federal government will be providing $20 million over five years, starting in 2021-22, to bring together governments, experts and stakeholders to design this new national plan. Five years is a long way off and these plans could be impacted by an election expected as early as the spring of 2021 due to the current minority government. It is unclear if any new dollars will flow to service managers beyond what was already announced in the Safe Restart Agreement.
$100 billion over three years will be spent on economic stimulus. A national child care strategy is expected to be included in that funding along with “investments in the green economy, job training, rural broadband, airport infrastructure, rapid housing, economic empowerment for vulnerable communities and measures to build up our health and social infrastructure.
This could be potentially good news for the housing and homelessness sector, with future details and potentially new funding to be revealed in the full 2021-22 budget. Broadband is also badly needed in rural communities as government services increasingly go digital and more of our economy moves online.
The goal of the Fall Economic Statement was to summarize actions to date, provide pandemic support through the winter and set the tone for an economic recovery plan in the 2021 budget. The Conservative Party and Bloc will likely oppose the speech but it is expected to receive support from the New Democratic Party to avoid a snap election at this sensitive time.
OMSSA will continue to work with FCM, AMO and other municipal associations to advance federal priorities in housing, homelessness, child care and social assistance over the coming months.