Canada projects $381 billion deficit due to COVID-19 spending

OTTAWA (NEWS 1130) — The country’s deficit is projected to reach $381.6 billion by the end of the year because of COVID-19 spending to help Canadians through the pandemic, according to the federal government’s latest economic update released Monday.

The numbers show the deficit could be closer to $400 billion if widespread COVID-19 lockdowns return.

The federal Liberals say they will spend up to $100-billion to rebuild Canada’s economy over three years once the COVID-19 pandemic has passed.

There is no set date for when Ottawa will wind down massive stimulus and support measures.

The federal economic update has been released
$1-billion for long term care
vow for $100-Billion stimulus spending plan over 3 years
First steps to national child care
Up to $1,200 for families with young children
Targetted industry supports
A deficit of $381-billlion #cdnpoli

— Cormac Mac Sweeney (@cmaconthehill) November 30, 2020

Federal Finance Minister Chrystia Freeland defends the spending, saying she is putting in place what she’s calling fiscal “guardrails” as part of the economic recovery plan to determine when to phase out government stimulus.

She says she’ll be using jobs data to track the recovery to determine when the economy has hit a point the country can ease off supports.

“We believe that there’s not a single metric that lets you know what’s going on in the labour market, so we are going to look at employment, unemployment, and crucially hours works,” she says.

When will the stimulus/support spending start to wind down? The Federal Finance Minister @cafreeland says they don’t want to set an exact date. Instead setting ‘fiscal guardrails’ to make those decisions based on job creation, unemployment rate, and hours worked #cdnpoli

— Cormac Mac Sweeney (@cmaconthehill) November 30, 2020

Freeland says there can’t be a fixed end date when the country is in a global crisis, so she won’t be giving specific targets. More details will be announced in the spring, though.

She adds the government is proposing to spend $25 billion to help businesses and their employees make it through the winter.

“We will do whatever it takes to help Canadians stay healthy, safe, and solvent. We will invest in every necessary public health measure and we will support Canadian families and Canadian business in a prudent and effective way,” Freeland says.

The Economic update also includes
$2.6 billion/7 years to help homeowners with energy-efficient renovations
Removing GST/HST off the purchases of face masks and face shields
$1.5 billion, to buy more PPE
eliminating interest federal portion of Student Loans for 2021-22 #cdnpoli

— Cormac Mac Sweeney (@cmaconthehill) November 30, 2020

The new measures in the update will face a confidence test in the House of Commons.

In a minority government, the Liberals will need the support of one of the major opposition parties to carry on.

The NDP has indicated it is willing to negotiate for its support.

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As part of the update, Ottawa is moving towards a national childcare program, which the Liberals claim will bring in money to stimulate the economy.

The Liberals are proposing in their fiscal update to spend $420 million in grants and bursaries to help provinces and territories train and retain qualified early childhood educators.

The government is also proposing to spend $20 million over five years to build a child-care secretariat to guide federal policy work, plus $15 million in ongoing spending for a similar Indigenous-focused body.