Freeland pledges billions in new COVID-19 supports as omicron cases rise
Fiscal update shows debt-to-GDP ratio coming in lower than forecast, giving the government some breathing room
Finance Minister Chrystia Freeland tabled a fiscal and economic update today that commits billions of dollars in new spending to help Canada ride out a relentless health crisis.
While the government made a number of big-ticket promises during the last election campaign, this relatively short 96-page document is focused on the fight against COVID-19 — something Freeland described as "our most important national project."
Major Liberal campaign commitments — such as new housing supports, health transfer hikes and climate change initiatives — have been put off until the spring budget as the government adopts an "omicron-centric" approach to governing in the short term, a senior government official told reporters at a briefing.
Two of Freeland's staffers test positive
Proving that the pandemic is anything but over, two positive COVID-19 tests among Freeland's staff prompted her to change plans and deliver the economic update virtually, out of "an abundance of caution."
Freeland's fiscal update projects a $144.5-billion deficit for 2021-22 — an eye-popping figure that's still $11 billion lower than the original forecast because of higher tax revenues and low uptake on some COVID-19 programs during the summer and fall months.
The last budget in April said that the debt-to-GDP ratio would hit 51.2 per cent this fiscal year, up dramatically from pre-pandemic levels of about 30 per cent. Tuesday's forecast says it will peak this year at 48 per cent before declining to 44 per cent by the 2026-27 fiscal year.
As the omicron variant sweeps across Canada, pushing up once dormant case counts, this fiscal update commits $4.5 billion for "variant response" — money that can be used to extend lockdown support measures and expand border testing if necessary.
A senior government official said Ottawa set aside such a large omicron contingency fund because so much is still unknown about omicron — a variant that Canada's chief public health officer, Dr. Theresa Tam, said Monday needs to be brought under control to keep hospital capacity stable.
Opposition parties respond
Speaking in the House of Commons after the update, Conservative Leader Erin O'Toole attacked the Liberals' handling of the economy and the fiscal update's relative silence on rising inflation, which recently hit levels not seen since the early 2000s.
The annual rate of inflation reached an 18-year high of 4.7 per cent in October. The central bank expects inflation to average 3.4 per cent next year.
"The minister is actually hoping to fool Canadians into thinking everything is fine," O'Toole said. The leader of the Official Opposition argued the Liberals have a "high tax, high debt agenda."
WATCH | Erin O'Toole criticizes Liberal handling of economy:
Speaking later Tuesday, NDP Leader Jagmeet Singh said "this fiscal update really is a failure."
The NDP has joined with the Conservatives in attacking the Liberals over the rising cost of living.
"This inflation hurts regular folks but certainly benefits those at the top," Singh said. "Banks, large corporate groceries are not impacted in a negative way by the inflation. It's really working class people, it's everyday folks that are hard hit by it."
New Democrats also harshly criticized benefit clawbacks imposed on seniors who received pandemic supports — something the Liberals sought to address in the update.
"The vague promise of a one-time payment in the future does not respond to vulnerable seniors who have lost their homes because of the clawbacks of the financial supports," Singh said.
Government buying millions of rapid tests
With daily COVID-19 case counts expected to more than quadruple by January, the government is promising $1.7 billion in new spending to bulk-buy 180 million more rapid tests for provinces and territories. Ottawa says it wants the devices directed to schools, workplaces and individual Canadians free of charge.
Experts have long said rapid tests are a critical screening tool that can be used to make everyday activities safer — but few jurisdictions in Canada have made them widely available. That's left some people scrambling to buy tests online at inflated prices ahead of Christmas festivities.
The fiscal update document says that deploying rapid tests widely is an "important tool for breaking paths of transmission" because people can use them to "quickly, easily and regularly monitor" for the virus.
Booster shots, antivirals
With the National Advisory Committee on Immunization (NACI) recommending booster shots for all Canadians over the age of 18, the economic update is commiting $7.3 billion to procure boosters this year and in the coming years, if needed.
As the fight against COVID-19 shifts from a focus on physical distancing, personal protective equipment (PPE) and vaccines, Ottawa is committing $2 billion to buy new treatments like the antiviral drugs made by Merck and Pfizer.
These promising products are designed to prevent hospitalization and death among high-risk people who contract the virus. A Health Canada review of these products is still underway but early data released by these companies suggest they are effective.
To shore up the Public Health Agency of Canada (PHAC) — part of a public health system that Tam said on Monday is "stretched dangerously thin" two years into the pandemic — the federal government is also promising more than $405 million for ongoing COVID-19 pandemic response activities, such as stronger surveillance, laboratory research and emergency management operations.
Money for ventilation
To help small business owners improve their air quality, the federal government is introducing a new 25 per cent tax credit to help offset the cost of investing in new ventilation and air filtration equipment. It's a measure meant to curb the spread of COVID-19, which is generally passed from one person to the next through exposure to respiratory fluids carrying the virus.
Another $100 million in federal money will be sent to provinces, territories and First Nations communities for "ventilation-related improvement projects" at schools, with millions of dollars more in spending coming for similar projects at other community buildings such as hospitals, libraries and community centres.
With many companies pausing their plans to return workers to the office, the federal government is extending for two more years a program that allows employees to easily deduct home office expenses at tax time. Workers can claim home expenses worth up to $500.
"As we brace ourselves for the rising wave of omicron, we know that no one wants to endure new lockdowns. That's why vaccines, vaccine mandates, boosters, ventilation and rapid tests are so essential," Freeland said in her speech to MPs.
Other major spending commitments in Tuesday's document include a one-time $5 billion transfer to help B.C. deal with the fallout from the recent floods, and $24.5 billion to settle a lawsuit related to compensation for First Nations kids and to reform the Indigenous child welfare system. The government also has booked $1.3 billion over six years to resettle 40,000 Afghan refugees in Canada.
Highlights of the 2021 fiscal and economic update:
-
$37.4 million over three years to implement and oversee vaccine mandates for air, rail and marine employees and passengers.
-
$300 million to help provinces and territories with proof-of-vaccination programs.
-
$1.7 billion to help provinces and territories secure rapid tests.
-
$2 billion over two years for COVID-19 therapeutics.
-
$241 million over three years for a business tax credit to improve air quality in workplaces. The move provides a credit for 25 per cent of eligible expenses between Sept. 1, 2021 and Dec. 31, 2022.
-
$110 million this year to help provinces, territories and First Nations improve ventilation in schools.
-
$70 million over three years for ventilation projects in public and community buildings such as hospitals, libraries and community centres.
-
$30 million over three years to adapt public spaces to facilitate social distancing and outdoor gatherings.
-
$742.4 million in one-time payments for GIS recipients who received CERB or the Canada Recovery Benefit (CRB) in 2020 and saw their GIS payments clawed back.
-
$67.9 million to help students with debt related to improperly claiming the CERB instead of the Canada Emergency Student Benefit (CESB).
-
$385 million over two years to extend the home office expenses tax deduction and increase the temporary flat rate to $500 a year.
-
$62 million next year to establish a new Canada Performing Arts Workers Resilience Fund to support artists who make a living through live performances.
-
$29 million over six years to support teachers and early childhood educators with a tax credit worth 25 per cent for eligible supplies.
-
$101 million to extend the Highly Affected Sectors Credit Availability Program to March 31, 2022.
-
$50 million this year to help strengthen supply chains and address bottlenecks.
-
$85 million next year to speed up the processing of permanent resident and temporary resident applications.
-
$1.3 billion over six years and $66.6 million in future years to resettle 40,000 vulnerable Afghans and their families in Canada.
