The Buzz

2021 Federal Fall Economic and Fiscal Update

On December 14, the Finance Minister and Deputy Prime Minister Chrystia Freeland's delivered a second Fall Economic Statement focused on the fight against COVID-19.

The Fall Economic Statement makes significant commitments on new pandemic spending. Yet, Minister Freeland ended her speech on a note consistent with the Government's focus on core party priorities like climate change, Indigenous reconciliation, and the economy this year.

The Fall Economic Statement provided a fiscal snapshot that is outlined below:

• A $25.1 billion surplus in Canada's balance of trade in October
• Household employment income reaching seven percent above pre-pandemic levels
• Recovery of the roughly three million jobs lost because of the pandemic
• Canada is on track to reach its pre-crisis GDP five months quicker than after the 2008 recession.
• Deficit of $327.7 billion for the last fiscal year and $144.5 billion for this fiscal year
• The Debt-to-GDP ratio in FY 2020-21 was 47.5 percent. It is forecast to peak at 48.0 percent in FY 2021-22 and then decrease steadily.

The Fall Economic Statement featured a series of measures meant to address the rising cost of living and support workers in sectors still significantly affected by the pandemic. These measures were accompanied by an acknowledgement that the Government is "mindful of elevated inflation and its impact on the cost of living for Canadians" as well as an explanation that "inflation is a global phenomenon driven by the unprecedented challenge of re-opening the world's economy."

These comments seek to ward off attacks from the Conservatives and NDP. However, the measures announced position the Government as active on economic recovery and supportive of workers and industries. Commitments include:

• An extension of the small business deadline for the repayment of Canada Emergency Business Account loans
• Providing debt relief to students required to repay the ineligible Canada Emergency Response Benefits by proposing to offset their debt with the Canada Emergency Student Benefit amount for which they were eligible
• Ensuring seasonal workers receiving pandemic benefits can still qualify for the EI Seasonal Workers Pilot Project.
• Further extending the Canada Recovery Hiring Program until May 7, 2022
• Establishing the $60 million Canada Performing Arts Workers Resilience Fund

Canadian supply chain congestion is a factor in driving up the cost of goods ahead of this year's holiday shopping. To address these concerns, $50 million is being committed under the National Trade Corridors Fund to assist Canadian ports with acquiring cargo storage capacity along with other measures. 

COVID-19

Minister Freeland emphasized the Government's role in fighting the pandemic and left the door open to future spending measures, noting an uncertain global economy and the unpredictability of COVID-19. New funding commitments to fight the pandemic include:

• $1.7 billion to buy more than 180 million rapid tests
• $4.5 billion to fund new costs around combatting Omicron and other COVID-19 surges
• $37.4 million over three years, starting in 2021-22, to Transport Canada with implementation and oversight of the vaccine mandate for federally regulated air, rail, and marine employees and passengers
• Up to $2 billion over two years to support the procurement of COVID-19 therapeutics, and associated costs

Please visit the Government of Canada website for additional information and to view the update. https://budget.gc.ca/efu-meb/2021/home-accueil-en.html