Federal Finance Minister Chrystia Freeland painted a rosy picture for Canada’s economic recovery during her latest fiscal update this afternoon, saying the country has “largely recovered” from the financial impact of COVID-19.
Freeland, speaking remotely to parliament due to two members of her staff testing positive for COVID-19, said the latest figures show that Canada has now recovered 106% of the 3 million jobs lost during the pandemic, while the GDP contraction of 17% last year has almost been regained.
The update said the size of the Canadian economy will reach $2.48 trillion – almost in line with projections made in 2018, before the pandemic existed.
“When [the pandemic] first hit, many predicted it would take years to rebuild,” Freeland said. “That’s why we are so pleased to report that Canada has largely recovered from the economic damage imported by COVID-19 – and is poised for robust growth in the months to come.”
According to Freeland, the Canadian fiscal deficit of last fiscal year - $327.7 billion – is now expected to drop to $144.5 billion for this fiscal year. The minister added the pace of recovery compares favourably to that after the 2008 recession.
The minister also announced a number of favourable numbers: 6,000 additional active businesses when compared to pre-pandemic figures, household employment income being up 7% from pre-2020 levels, and a GDP growth of 5.4% in Q3 2021 (outpacing the rate seen in the United States, Great Britain, Japan and Australia).
The numbers also showed that the federal debt-to-GDP ratio will peak at 48% this year – lower than the 51.2% projection in the spring 2021 budget – while continuing to drop in the coming years. Freeland credited the Liberal government’s transition into more narrowly focused (and less costly) support programs for people affected by the pandemic in October as the reason for dropping debt levels, as well as an increase of the percentage of bond issuance as long-term debt from 42% to 45%.
“Pushing more of our debts into bonds with a longer maturity ensures that Canada’s debt servicing costs are sustainable,” Freeland said. “Thanks to an improving fiscal outlook, the amount of money we will need to issue and borrow this year is $35 billion lower than forecast in Budget 2021.”
Freeland did caution, however, that the ongoing threat of the new Omicron variant of COVID-19 presents a level of ongoing uncertainty that needs to be managed.
“COVID is still with us,” she said. “The Omicron variant is serious, and we need to take it seriously... I know how hard it is for us to accept that, but it’s the reality. But it’s better to take action now than to do something in the future.”
The rosy update was, however, derided by opposition MPs.
Tories MP and shadow finance minister Pierre Poilievre heavily criticized the numbers in the update, noting the revenue figures were boosted by inflation up to 50% higher than what the Liberal government originally expected in the spring budget – leading to higher consumer prices on goods, gas and other products and higher sales tax revenue for Ottawa.
“The deflation [Freeland] said we’d have a year ago has definitely not materialized,” Poilievre said. “The half-a-trillion dollars in inflationary deficits mean more dollars chasing fewer goods and at higher prices. The result, of course, is that housing and gas [prices] are up by a third, making it harder for people to get to work or house themselves. Food prices will rise $1,000 for the average family next year, not to mention the taxes cost more to the average family than food, clothing and shelter combined.
“The more this government spends, the more Canadians pay,” he concluded.
Freeland also announced a number of new funding initiatives during the fiscal update presentation. These new funding earmarks include an additional $1.7 billion set aside to get 180 million new rapid COVID tests, as well as $4.5 billion for specific Omicron-related measures in the future.
Of particular note for British Columbia is a $50 million commitment to launch calls-for-proposals to help ports acquire new cargo capacity to deal with ongoing supply chain congestion. The Port of Vancouver has been front and centre on such issues in recent months, with severe rainstorms knocking out rail and road links to the port while creating serious bottlenecks throughout the transport infrastructure.
Freeland also announced that Ottawa has reached $10-a-day childcare agreements with nine provinces and one territory, including B.C. Ontario, Nunavut and the Northwest Territories are the administrative regions to have yet to sign on.
The full update can be read at www.budget.gc.ca/efu-meb/2021/report-rapport/EFU-MEB-2021-EN.pdf.