Finance Minister and Deputy Prime Minister Chrystia Freeland touted more housing and cheaper groceries in a fiscal update Tuesday that projects ballooning deficits in coming years to help Canadians struggling with soaring costs of living.
“Inflation is coming down, wages are going up and private sector economists now expect Canada to avoid the post-pandemic recession that many had predicted,” Freeland told the House of Commons on Tuesday.
But, she added, “I absolutely understand that after three difficult years — with a global pandemic, global inflation and global interest rate hikes — Canadians are worn out, frustrated and feeling the squeeze.”
The mini-budget earmarks billions of dollars for new rental apartments and new houses — as well as the repurposing of federal lands for housing construction — while seeking to curb short-term rentals by denying tax deductions for Airbnb expenses, for example.
It also provides a timeline through 2024 for paying subsidies for carbon capture and other clean tech projects.
And Freeland vowed to amend the Competition Act to spur more competition in the grocery sector, which is dominated by five big grocery chains in Canada.
Despite inflation slowing to 3.1 per cent in October, outsized costs for housing and groceries are still hitting Canadian pocketbooks hard — and they have been vocal about it to politicians.
In addition to inflation and an economic slowdown exerting pressures on federal finances, Justin Trudeau’s government is walking on eggshells, criticized for its spending by an opposition leading in the polls.
The autumn economic statement revises upward Canada’s expected economic growth this year to 1.1 per cent, from 0.3 per cent projected in Freeland’s March budget.
But growth is now expected to slow to 0.4 per cent in 2024 — much slower than the 1.5 per cent forecast in March — before rebounding in 2025.
Ottawa’s budgetary balance meanwhile, is expected to remain just below the deficit projected for 2023-24 in March, at $40 billion.
This is expected to gradually improve to a $18.4 billion deficit in 2028-29.
But deficit spending will be much higher over the coming years than was previously projected.
Canada’s debt-to-GDP ratio will also continue rising to 42.7 per cent in 2024-2025 before starting to fall.
