Finance Minister Chrystia Freeland presented a Canada 2022 budget in the House of Commons on Thursday, which she wrote in orange-red ink. This provides for additional spending of approximately $55 billion over five years, including some $9 billion in 2022-2023. A few highlights.
Reimbursement of dental expenses
The federal government will cover dental costs for children under 12 in 2022, young people aged 12 to 18 and people aged 65 or over and those with disabilities in 2023, before partially reimbursing those everyone else. Canadians with an annual family income of less than $90,000 in 2024 and 2025. People with an annual income of more than $70,000 will have to pay a “copayment”. The federal government estimates the cost of this new program — born of the agreement between the Liberal Party of Canada and the New Democratic Party (NDP) — at $5.3 billion over five years, including $300 million in 2022-2023 and $600 million in 2023-2024.
New fund to accelerate housing construction
Ottawa will grant no less than $4 billion to Canada Mortgage and Housing Corporation (CMHC) to accelerate the creation of some 100,000 housing units across the country.
“The bottom […] could offer support such as an annual “per door” incentive for municipalities, or initial support for investments in municipal planning and delivery processes for housing programs that will accelerate the construction of housing,” says the Ministry of Finance. .
Affordable housing, fast
It will provide an additional $1.5 billion over two years ($1 billion in 2022-23 and $500 million 2023-24) to CMHC to “build quickly” more than 6,000 new affordable housing units. More than a quarter of the funds will be used to make “women-focused” housing projects a reality.
Creation of the tax-free savings account for the purchase of a first property
Canadians dreaming of owning a first home will be able to set aside up to $40,000 in a tax-free savings account for the purchase of a first home (TFSA) with maximum annual contributions of $8,000 tax deductible. On D-day, they will be able to withdraw their savings as well as the investment income without being bothered by the tax authorities.
Tax credit for the purchase of a first home doubled
First-time home buyers will get tax relief of up to $1,500 — not up to $750.
Towards a charter of rights for property buyers
The federal government is committed to working with the provinces and territories to make the home buying process “more open, more transparent and fairer” by putting a stopper on blind bids and granting a legal right to inspection.
A brake on foreign investment
Justin Trudeau’s team intends to prohibit foreign legal and natural persons from acquiring non-recreational residential properties in Canada for a period of two years. Permanent residents, foreign students who are in the process of obtaining permanent residence, holders of work permits, as well as refugees will be able to take up residence in the country, “under certain circumstances”.
Defense budget
National Defense sees its budgets increased by eight billion. But this sum is not even sufficient to make up for the delay already incurred. For the future, the government is announcing a major review of its defense policy which could be accompanied by additional investments. Of these eight billion promised this year over five years, six billion will be paid to “respect the priorities” of Defense with its NATO allies, in terms of continental defense with the Air Defense Command of America North (NORAD) and for its Canadian Forces. The budget provides for $1.3 billion in remaining amortization, then investments of $1.4 billion per year after the first five years. In addition, $875.2 million over five years is devoted to cybersecurity, through the Communications Security Center.
Public-private investments for climate transition
Budget 2022 lays the foundation for the “Canada Growth Fund”. This “new public investment mechanism that will be operated independently of the federal government” aims to attract significant private investment to reduce greenhouse gas (GHG) emissions and foster the growth of not only low-emitting industries of carbon, but also others looking for “new technologies”. “The fund will be capitalized initially with $15 billion over the next five years. It will invest on a concessional basis, with the following objective: for every dollar it invests, the fund will seek to attract at least three dollars of private capital,” the finance ministry said.
Canada will require investments of some $125 billion to $140 billion each year to both “build a carbon-neutral economy” and “fight climate change” by 2050, Ottawa estimates. Far from it, Canada is currently investing between $15 billion and $25 billion.
Investment tax credit for carbon capture, use and storage
Minister Freeland intends to give impetus to “technologies that capture carbon dioxide (CO2) emissions from fuel combustion, industrial processes or directly from the air and then store the CO2, usually deep underground, or ‘use in other industrial processes such as permanent mineralization in concrete’ with the aid of a refundable tax credit. This will lead to additional spending of $2.6 billion over five years, then $1.5 billion per year until 2030.
$3.8 billion for the electrical sector in Canada
The new federal budget provides $3.8 billion in assistance over eight years to implement Canada’s first Critical Minerals Strategy. Among other things, the budget envelope includes $1.5 billion in funding for infrastructure investments “that will support the development of critical mineral supply chains.”
Ottawa is also creating a new critical minerals exploration credit of 30% for mineral exploration expenditures in Canada. This would apply to exploration spending targeting nickel, lithium, cobalt or graphite – essential for the production of batteries for electric vehicles. This measure is expected to cost the Government of Canada $400 million over the next five years.
This tax credit cannot be added to the already existing non-refundable 15% on specified mining exploration expenses incurred in Canada – intended for all minerals and not only critical ones – which will end on 31 March 2024.
No return to balanced budgets before 2027
After racking up deficits of $328 billion (2020-2021) and $52.8 billion (2022-2023) following the arrival of COVID-19, the Canadian government will post a budget balance of -39.9 billion in 2023 -2024. The federal deficit will gradually decline to $8.4 billion in 2026-27.
With Marie Vastel and Clémence Pavic
Further details will follow.