Federal Fall Economic Statement
After a summer of surging prices and slowing growth, Canadians were looking for support on cost of living and inflation. Enter Finance Minister, Chrystia Freeland, who tabled the federal government’s 2022 Fall Economic Statement (FES). The FES aims to provide an update to the country on how the Liberals intend to provide relief to Canadians and to maintain the confidence of the House. Key Highlights With a looming recession and economic uncertainty on the horizon the federal government presented a Fall Economic Statement built on three pillars: Making Life More Affordable Jobs, Growth and an Economy that Works for Everyone Fair and Effective Government Notable policies within these pillars include: Permanently eliminating interest on federal student and apprenticeship loans. An automatic advance for the Canada’s Workers Benefit, which provides income support for lowest-paid workers. The Launch of the Canada Growth Fund – a fund meant to drive private investment, based on environmental and economic goals. The creation of the Sustainable Jobs Training Centre – a centre tasked with providing learning opportunities to help workers upgrade or gain new skills for low-carbon jobs. The introduction of a 2% corporate level tax on share buy backs to encourage investments in workers. An investment tax credit of up to 30% for investments in clean technology. Investments to improve service delivery, including $1 billion to Service Canada to process EI and OAS claims faster, and $115 million for Veterans Affairs to reduce backlog and hire more case managers. What is the Government Saying? “Today, we are putting more money back in the pockets of people. The extra money families received today will help them buy groceries, pay the bills, and save for the future. Amid global economic uncertainty, we will continue to be there for people as we build an economy that works for all Canadians.” – Prime Minister Trudeau “Today’s Fall Economic Statement is focused on building an economy that works for everyone—an economy that creates good jobs and which makes life more affordable for Canadians. Even as we face global headwinds, the investments we are making today will make Canada more sustainable and more prosperous for generations to come.” – Finance Minister, Chrystia Freeland What’s the Opposition Saying? “… when we learned that the costly coalition would be introducing this economic update today, we had two demands: no new taxes on workers and seniors and no new spending unless matched by equal savings. Today, this inflationary scheme triples the tax on home heating, gas and groceries, and adds $20 billion of inflationary spending that will drive up the cost of living. The Conservatives will stand up for Canadians, their paycheques, their homes and their savings, and we will vote against this inflationary scheme.” – Leader of the Opposition, Pierre Poilievre “In a time where families are looking at their budgets and deciding whether they’ll be able to afford their mortgage in the next few years, today’s Fall Economic Statement showed that Justin Trudeau doesn’t understand what families are going through.” – NDP Leader, Jagmeet Singh What’s Next? Overall, the government’s Fall Economic Statement is focused on driving business investment, promoting environmentally-friendly business, and providing some support to those impacted by inflation. As a whole, this FES appears to be somewhat of a departure from the government’s normal high spending agenda and acts as a signal that the government is willing to lower its spending to combat inflation. While it provides stronger incentives to draw in business investments, it is lacking concrete measures to provide relief on aspects of the cost of living challenges. As pointed out by the opposition parties, there is little included to offer relief on gasoline and grocery costs, and also no real new announcements to assist with housing affordability, all key issues for Canadians according to the latest polling. In addition, there appears to be several policies included that are meant to appease the NDP and maintain their coalition going into the new year. Key policies like the share buy back tax, and eliminating interest on student loans are geared towards the NDP and their voters. So, what’s next? Currently, the government has passed a time allocation motion to speed up the vote on the second reading, as it attempts to pass this bill before the 6-week long holiday recess beginning December 20th. While the government is expected to pass this legislation with the support of the NDP, their Budget in 2023 will be critical to the government’s continued support in the face of a recession.