Federal budgets always grab a lot of attention, today’s even more so as it is the first in over two years. Chrystia Freeland’s first budget as Finance Minister comes after taking over the portfolio from Bill Morneau upon his resignation last summer. As Canada’s first female Finance Minister this also makes it the first federal budget to be delivered by a woman in our country’s history.
The headline numbers from this budget include the forecasted deficit of $154.7 billion in the 2021/22 fiscal year. That’s a vast improvement from the 2020/21 fiscal year, as the deficit for the most recent year is now projected to be $354.2 billion. For context, coming into the pandemic the 2019/20 deficit was $39.4 billion, and the federal projections run until 2025/26 where they forecast a deficit of $30.7 billion.
All the increased debt has naturally led to a spike in Canada’s debt to GDP ratio. The debt to GDP ratio is projected to peak at 51.2% this 2021/22 fiscal year before gradually declining to 49.2% in 2025/26.
At over 700 pages there is plenty to dig into. Some of the highlights include:
- Extending the Canada Emergency Wage Subsidy, The Canada Emergency Rent Subsidy and Lockdown Support to September 25, 2021;
- A new Canada Recovery Hiring Program that will run from June 6 to November 20, 2021. The subsidy would offset some of the costs employers take on as they reopen, and eligible employers will be able to claim whichever is higher between the Canada Emergency Wage Subsidy and this new subsidy;
- A new Digital Adoption Program that will provide eligible businesses with micro-grants, zero-interest financing and support from 28,000 digital trainers to help with new technology initiatives;
- Over $30 billion over the next 5 years into early learning and child care, with a goal of $10-a-day childcare by 2026;
- Over $2 billion over the next 7 years to support innovation in the life sciences, automotive, aerospace and agriculture sectors;
- Almost $2 billion over the next 4 years to the National Trade Corridors Fund; and,
- Introducing a federal minimum wage of $15 an hour.
As expected a lot of focus was placed on the environment. Key measures include:
- Committing $5 billion over the next 7 years to the Net Zero Accelerator;
- A new investment tax credit for carbon capture, utilization and storage;
- Issuing a $5 billion federal green bond this fiscal year; and,
- Providing up to $1 billion over the next 5 years in large “transformative clean technology projects” that will look to draw in private sector investment.
On the tax side a few minor changes were made:
- A digital services tax at 3% of revenue from certain digital services starting on January 1, 2022;
- New tax on the sale of luxury cars, personal aircraft and boats; and,
- An annual 1% tax on the value of non-resident, non-Canadian owned residential real estate.
With over $100 billion in new spending commitments, this budget includes a myriad of increased supports spread out over several areas. With a minority government all three opposition parties would need to vote against the budget to trigger an election. NDP Leader Jagmeet Singh has already come out and said he’s not interested in an election, so for the time being it looks like Canadians won’t be going to the polls in the next few weeks.
- Webpage ‘Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience’
- News Release – Budget 2021
- Budget 2021 Speech – Full text
Additional Backgrounders for Budget 2021
- A Healthy Environment for a Healthy Economy
- A Canada-wide Early Learning and Child Care Plan
- Building an Innovation Economy for the Future
- Job Creation
- Low-wage Workers
- Strong Indigenous Communities
- Support for Small Business
- Supporting Women
- Young Canadians
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