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Canada’s Finance Minister, Chrystia Freeland, will present the federal government’s fall economic statement on Tuesday, in a tense context – with the Canadian economy slowing and the Liberal Party losing popularity. Here, in a few points, are the elements to watch out for.
Housing and affordability
The rising cost of living and the housing crisis are expected to be central themes of this federal update.
“We will continue to take action on housing. And we will continue to work to make life more affordable for people here in Quebec and from coast to coast,” underlined Mr.me Freeland last week in reference to the economic statement.
She notably recalled the agreement between Ottawa and Quebec on the housing issue – a joint investment of $1.8 billion to accelerate the construction of affordable housing.
Help for the media?
Furthermore, according to information from Le Devoir, the federal government is studying the possibility of increasing the refundable tax credit on the payroll of newsroom employees from 25% to 35% to respond to the media crisis.
In an interview with our colleague Sandrine Vieira, the federal Minister of Heritage, Pascale St-Onge, in charge of the file, did not comment on future tax measures. But she “obviously” wants her colleague Chrystia Freeland to plan an increase in this tax credit, she said.
A drug insurance program?
It will also be necessary to monitor whether or not the economic statement will include the famous drug insurance program requested by the New Democratic Party, with which the minority Liberal government is forming an alliance.
The chances are low though. NDP Leader Jagmeet Singh said last week that he did not expect to see the plan come to fruition in Tuesday’s statement, since negotiations with the Liberals are “ongoing.”
According to an estimate from the Parliamentary Budget Officer, such a single-payer universal drug insurance plan would cost a total – that is to say the federal and provincial governments – $11.2 billion in 2024-2025 and 13, 4 billion in 2027-2028.
Budgetary and political pressures
The Trudeau government’s room for maneuver will, however, be limited by the current context: the economy is slowing and interest rates are very high.
Last week, Mme Freeland, did not fail to point out that Canada “displays the highest rate of budgetary consolidation in the G7”, as well as “the lowest deficit and the lowest debt-to-GDP ratio in the G7”.
But already, the Parliamentary Budget Officer stressed last month that the deficit for the current year should be higher than expected. While Ottawa predicted a deficit of $40.1 billion in last March’s budget, it could instead reach $46.5 billion, according to the public finance watchdog.
The Liberals will also be expected to turn the corner, given that their popularity is declining and that of their conservative opponents is rising in the polls.
Opposition demands
There are many expectations from the opposition parties to combat the housing crisis plaguing the country. All parties called for more measures to boost the construction of affordable and social housing in the Finance Minister’s economic update.
Conservative leader Pierre Poilievre made three requests to the government on Monday: a freeze on the carbon tax, a date to achieve a balanced budget and reduce inflation, as well as to encourage the construction of houses and apartments.
The Bloc Québécois, for its part, reiterated its request to create an emergency fund of $50M to help regional and national media get through the current crisis.
During the question period in Ottawa on Monday, Bloc Québécois House leader Alain Therrien also asked the government to keep its promise to invest one billion for a national school food program. The Bloc is also calling for the establishment of an emergency fund for homelessness, an increase in the old age security pension and an end to all direct or indirect subsidies to the oil industry.
New Democrats are urging the Liberals to use their economic statement to reduce grocery bills, including by increasing the number of foods exempt from the GST and announcing a new semi-annual GST rebate.
Like the Bloc Québécois, the NDP is also calling for a national school food program to be put in place.
The NDP has not expressed any specific expectations regarding the pharmacare program, a measure they are calling for before the end of the year in order to keep the Liberals in power. Negotiations in this regard are reportedly still ongoing.