Finance Minister Chrystia Freeland will today table her fourth federal budget, setting out the government’s plans to spend billions on housing to improve housing supply. The Liberal Party also hopes the plan will increase support among key voters.
In past budgets, most of the announcements were saved until the day of the budget, but this time they are being made public gradually. Freeland, Prime Minister Justin Trudeau, Housing Minister Sean Fraser and other cabinet ministers have been touring the country for several weeks, unveiling details of key budget measures.
It’s part of a plan to pitch voters on major new programs that may be lost in today’s news coverage of a budget proposal that is expected to be physically larger than in years past.
Freeland is scheduled to submit his budget around 4 p.m. ET. CBCNews.ca will livestream her remarks in the House of Commons.
The City of Ottawa announced approximately $38 billion in new financial commitments ahead of the budget release, including $17 billion in loan-based programs.
It is not yet clear how the federal government plans to finance these new spending. Officials told Radio-Canada that the budget would impose tax increases on the wealthiest taxpayers, but senior Liberal sources said less than 1 per cent of Canadians would be affected. That’s what it means.
Some of the planned new spending is earmarked for future fiscal years, a move that would give Ottawa more fiscal space.
The economy is also doing slightly better than Ottawa initially expected, which could mean increased revenues to offset some of the planned new spending.
Opinion polls continue to suggest that the government is conducting behind-the-scenes polls of housing-hunting voters, particularly Millennial and Gen Z voters.
In response, Freeland will send more cash to local governments through the Housing Acceleration Fund to build more housing on underutilized public land and build new water and solid waste resources in growing communities. It cut checks for infrastructure and freed up funds to provide tens of billions of dollars in loans to the region. Accelerate the construction of new rental housing and secondary suites, and help nonprofits acquire existing rental housing and keep it affordable.
28 pages of government housing planthe policy announced last week includes maintaining the already highly subscribed tax-free savings account, extending mortgage amortization periods, and increasing RRSP withdrawal limits for some first-time homebuyers. I promise.
It’s the latest in a dizzying series of pledges aimed at blunting attacks from critics like Conservative Party leader Pierre Poièvre, who has put housing at the center of his policy strategy.
Prime Minister Trudeau told the Canadian Chamber of Commerce on Monday that millennials and Gen Z people, who now make up the majority of the country’s workforce, need to step up to address the “cost of living crisis.”
“This group is resilient, but they feel that middle-class stability is out of reach,” he said. “We need to seize this moment. Our country cannot succeed unless our young people succeed.”
Deputy Prime Minister Chrystia Freeland on Thursday announced new measures aimed at easing the financial burden on first-time homebuyers, including a 30-year amortization rate on insured mortgages for new homes.
Freeland also announced $500 million for youth mental health, $2.4 billion for artificial intelligence, $8.1 billion in new defense spending, and a $1 billion fund to expand school lunch programs.
“We recognize that investing in Canada and Canadians is urgent today, and we recognize that this is a pivotal time, especially for young Canadians, Millennials and Gen Z,” Freeland said last week. “There is,” he said.
It’s a long-standing Canadian tradition for the finance minister to buy a new pair of shoes before the budget.
On Monday, Freeland chose black pumps from Maguire, a Montreal-based company run by millennial women. This is a nod to the people the government hopes to reach with its latest spending plan.
Although the proposed budget is expected to increase spending, Freeland said he does not intend to increase last year’s $40 billion deficit forecast. Today, the public will learn what the government’s projected deficit and debt levels are and how it plans to keep the country on a sustainable fiscal path.
The Trudeau government has run a deficit every year since being elected.
The company posted an even bigger deficit during the coronavirus pandemic as it scrambled to rebuild its beleaguered economy during an unprecedented global health crisis.
Under the Liberal government’s watch, the national debt has more than doubled to $1.2 trillion.
Interest rates are now at 20-year highs and the cost of servicing that debt has jumped to $46.5 billion from $20.3 billion in 2020-21, according to Freeland’s fall economic report.
That’s nearly double what Ottawa spends on its military. And debt service costs are expected to rise further in the coming years.
Political watchers say Ottawa has no choice but to raise taxes in the next federal budget to offset billions of dollars in new spending, but it remains to be seen who will get the money.
Ottawa faces some difficult choices as economic growth stagnates and high inflation increases government spending pressure.
Freeland’s preferred fiscal “guardrails” have changed over the years.
Freeland said in his fall economic statement that Ottawa will keep the budget deficit at about 1% of gross domestic product (GDP), effectively 1% of the size of the national economy, and lower the debt-to-GDP ratio.
Tuesday’s document will reveal whether Ottawa has kept that promise. The government’s decision to cut or “re-plan” some spending (estimated annual savings of about $2.25 billion) has helped, but there may be more work to be done.
Canada cheats with rating downgrade, RBC warns
in recent reportsRBC Royal Bank has warned that Canada faces a possible downgrade from the rating agency — a development that would be bad for the government and everyone who owes money in the country.
Canada is one of a select few countries with a AAA credit rating for its sovereign debt.
RBC said “Canada is at greater risk of a downgrade than its other top-rated peers” as the City of Ottawa increases spending to address the housing crisis.
Economist Rachel Battaglia said in an RBC report that “widening budget deficits and the associated rise in sovereign borrowing costs may seem like a distant problem to many Canadians, but their impact will be felt by most Canadians. This could have a ripple effect on households and businesses.”
Experts predict that the government will increase taxes.
Freeland’s government last week ruled out raising taxes on the middle class, but its definition of “middle class” has never been clear.
“I’m pretty confident they’re going to increase revenue as they continue to tighten their finances and commit to unsustainable spending,” said Robert, senior vice-president of policy at the Business Council of Canada.・Asselin said. He served as an advisor to Bill Morneau when he was finance minister.
Budget will target wealthy Canadians
Many experts predict tax measures targeting wealthy Canadians, large corporations, or both.
“The problem is [the government] A surcharge or wealth tax on big corporations sounds great, but it’s actually terrible. They don’t work,” Asselin said.
“Let’s be honest: They have to raise taxes. I don’t think it’s a big secret. But can they do it in a thoughtful and provocative way?” Wellington James Thorne, chief capital markets strategist at Altus Private Wealth, said:
“If you do that to high-income people, they just move their money overseas.”
NDP Leader Jagmeet Singh told reporters at Parliament House on Monday that he expects the government, his party’s partner in the trust and supply agreement, to “stand up against corporate greed.”
![New Democratic Party Leader Jagmeet Singh speaks to reporters before attending a committee meeting on Parliament Hill in Ottawa, Thursday, April 11, 2024.](https://i.cbc.ca/1.7172041.1712939368!/cpImage/httpImage/image.jpg_gen/derivatives/original_780/parl-bell-cuts-20240411.jpg)
“The wealthy should pay,” he said, adding that large corporations should also pay.
“We don’t want any pressure to be put on workers. We don’t want to increase taxes on working class people. We want big companies to start paying their fair share. I’m here.”
Poièvre, who has called Trudeau and his government “not worth the cost,” said at a conference in Ottawa last week that his party will vehemently oppose any tax increases.
“We believe that dollars are always more powerful in the hands of those who earn them than in the hands of the politicians who tax them,” he said.