OTTAWA | The federal government is setting aside an additional $ 4.5 billion to deal with Omicron and is drawing an end to the return to balanced budgets.
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In addition to the $ 10 billion already planned for the current year, Ottawa is reserving four billion more to relaunch aid to workers and businesses in the event of new lockdowns. And another 500 million will go to new border measures.
Photo REUTERS
Finance Minister Chrystia Freeland presented her remote economic update yesterday in the House of Commons as two members of her team tested positive for COVID-19. The minister was declared negative.
That’s what Finance Minister Chrystia Freeland said yesterday in her fall economic update. She made the presentation remotely since she was placed in isolation after two of her collaborators tested positive for COVID-19.
Given the variant’s rapid progress, the government could have to spend much more than that, estimates economist Robert Asselin, former director of policy and budget to the Minister of Finance, now vice-president of the Business Council of Canada.
“I think $ 4.5 billion is really optimistic,” he said.
Listen to the interview with Luc Godbout, holder of the Research Chair in Taxation and Public Finance at the University of Sherbrooke, on QUB radio:
Big deficit
The last 21 months of the pandemic have already cost dearly, bringing the deficit to $ 327.7 billion for the year 2020-2021.
Far from ceasing, pandemic spending will continue with billions for drugs against COVID-19, rapid tests, ventilation in public buildings and recipients of subsidies of all kinds.
Minister Freeland said she was pleased that the rapid economic recovery has made it possible to spend slightly less than expected.
However, we are very far from returning to a balanced budget. Instead, Ottawa forecasts that the deficit will stand at $ 144.5 billion in 2021-2022 and then $ 13.1 billion in 2026-2027.
“We do not have an objective of returning to a balanced budget. It is not our way of thinking about good management of our business, ”said a senior government official.
The economic update indicates that program expenses will cost approximately $ 15 billion per year between 2022 and 2027. To which must be added the campaign pledges of the Liberals which totaled $ 78 billion.
We need more income
To fund all of this, Minister Freeland stressed the importance of generating growth, which will inflate state revenues, but she did not explain how she would do it. For that, we will have to wait for the budget in the spring.
Public finances are currently benefiting from the exceptional growth (5.4%) of GDP in the third quarter and from inflation, especially in the oil sector, which allows the State to collect more money in taxes.
But to fund generous social programs and keep Liberal election promises, it will take much more than that, warns Mr. Asselin.
Overview of new spending
- $ 39.9 billion over 6 years to compensate First Nations children and their families who have been removed from their homes since the early 1990s.
- $ 4.5 billion to meet potential new costs to control the Omicron variant. This amount includes $ 500 million for border measures and $ 4 billion for aid to workers and businesses in the event of stricter containments.
- $ 2 billion over 2 years for the purchase of anti-covid-19 drugs.
- $ 1.7 billion to provide 180 million more rapid tests to provinces.
- $ 742 million in ad hoc assistance for seniors receiving the Guaranteed Income Supplement and for certain beneficiaries of the PKU and the PCRE.
- $ 85 million to tackle backlogs in the immigration system. Ottawa expects to welcome 411,000 immigrants next year, the highest threshold in history.
- $ 70 million to help ventilate public buildings, including schools, to prevent outbreaks. There is also a small business tax credit to improve air quality.
- $ 67.9 million to alleviate the debt of students who received the wrong emergency benefit.
- $ 60 million in support of workers in the entertainment industry and extension of the $ 500 tax credit for home work expenses.
- $ 50 million to help decongest ports in order to make the supply of goods more fluid.