Photo: Canadian Press

By Canadian Press

$452B federal budget focused on affordability, innovation

Apr 7, 2022 | 2:58 PM

OTTAWA — Finance Minister Chrystia Freeland’s second pandemic budget turns Canada’s fiscal focus to making life more affordable for people and giving a long-needed boost to Canadian productivity.

Freeland is wrapping the budget in copious amounts of yellow caution tape, warning of extreme economic uncertainty posed by Russia’s invasion of Ukraine and the lingering effects of COVID-19.

She makes clear the budget is winding down pandemic-related spending that headlined the last two years, shifting to social economic drivers like housing, immigration and child care.

That should help the Liberals pass this budget easily given their new deal with the New Democrats, with multiple NDP priorities such as dental care, green jobs and a tax on excess bank profits making the cut.

Freeland warns heavily about the security threat posed by Russia’s aggression in Europe, responding with more than $8 billion in new defence spending and up to $1 billion more in new loans for Ukraine.

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Federal spending falls to $452 billion in the new fiscal year with a deficit of $52 billion, which are the lowest figures since before the pandemic but still significantly above pre-pandemic levels.

Economy

The budget includes more than $85 billion in new spending.

It’s targeted at speeding the flow of goods through the country’s supply chains, boosting housing supply and jolting businesses out of an anemic period of investment.

The new spending has increased the fiscal year’s deficit to $52.8 billion from earlier estimates of $44.1 billion.

Government officials framed the spending as a hedge against near-term economic uncertainty created by Russia’s unprovoked invasion of Ukraine and the sixth wave of the COVID-19 pandemic.

Housing

A major component of the budget is the addition of $10 billion in funding meant to speed up home construction and repairs.

Increasing housing supply is the clear focus of the spending commitments, which include $4 billion for municipalities as part of a housing accelerator fund, $1.5 billion for affordable housing and $4.3 billion for Indigenous housing.

The Liberals say they will also leverage more than $40 billion in infrastructure funding to push cities and provinces to act faster on housing.

To tamp down on speculation and demand, the Liberals have also proposed a two-year ban on foreign home buying as well as higher taxes for people who sell their home within a year, though both measures include multiple exceptions.

The budget also includes measures to help people trying to get into the market, including a new savings account and changes to the first-time home buyers tax credit.

Defense

The Liberals are promising more than $8 billion in new spending on Canada’s military over the next five years.

However, most of that will not materialize for some time and it isn’t exactly clear what that money will buy.

Canada has been under pressure to follow other members of the NATO military alliance and spend more on its military in the wake of Russia’s invasion of Ukraine, with members urged to dedicate two per cent of their GDP to defence.

Health

The government put forward a spending plan to launch dental care for low and middle-income families in 2022, which was a key element of the Liberal’s confidence and supply agreement to prevent an election until 2025.

The plan is to begin with children under 12 in 2022 at an initial cost of $300 million, with an expected annual cost of $1.7 billion once the program is fully implemented.

There was little in the way of new funding for Canada’s struggling healthcare systems overall.

Health transfers to the provinces will increase by nearly five per cent this year, but only because the economic outlook is sunnier than expected.

As previously announced, the government also plans to send provinces $2 billion to help them work through the massive surgical backlogs that mounted over the course of the pandemic.