(Ottawa) Despite being aware that fiscal policy and monetary policy need to be aligned, Finance Minister Chrystia Freeland did not signal that there would be a reduction in spending in her next economic update , as Bank of Canada Governor Tiff Macklem would like.
“We are very aware and very attentive to this,” she said Tuesday, referring to the consistency that there must be between the government’s fiscal policy and the monetary policy of the Bank of Canada.
Mr. Macklem had issued a warning the day before that the growth in federal and provincial government spending risks fueling inflation and, therefore, complicating the central bank’s efforts to bring it down to 2%. It has already increased the policy rate 10 times in the last 18 months.
“He spoke of the need for fiscal policy at all levels of government not to stand in the way of monetary policy. I am also aware of it,” added the woman who is also deputy prime minister.
She then reiterated that Canada has the lowest deficit in the G7, the lowest debt-to-GDP ratio and that it is also the G7 country that managed to consolidate its finances the fastest after the meteoric rise in spending. during the COVID-19 pandemic.
“When it comes to tax policy, we are very concerned about ensuring that our spending is focused on the main priorities of our government,” said the President of the Treasury Board, Anita Anand, emphasizing in passing that the main priority is the cost of living.
She asked all ministries in August to cut 15 billion over five years and 4 billion annually thereafter. The outcome of this spending review will form part of the supplementary estimates to be tabled in the House of Commons in November.
Minister Freeland’s economic update is expected in November. She and other federal ministers have already signaled the Trudeau government’s intention to increase spending to tackle the housing crisis and the rising cost of living.
The government will also have to loosen the purse strings to set up the drug insurance program called for by the New Democratic Party. This is one of the conditions of the agreement between the Liberals and the New Democrats to allow them to govern as if they were the majority.
The Parliamentary Budget Officer estimates that establishing a public and universal program across the country in January would cost 11.2 billion the first year and would rise to 13.5 billion five years later.
Savings of $1.4 billion would be generated in the first year because the government would be able to negotiate a wholesale price. They would rise to 2.2 billion in 2027-2028.
The New Democrats are threatening to withdraw their support for the minority Liberal government if they do not get a fully public and universal program, but Health Minister Mark Holland has already warned that the future program will have to take into account the finances of the government.
With Joël-Denis Bellavance, The Press