Freeland set to deliver update on federal finances and economic outlook

Freeland set to deliver update on federal finances and economic outlook
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OTTAWA — The federal Liberals will provide Canadians with a long-awaited update on the health of federal finances later today, and potentially unveil a suite of new spending.

Finance Minister Chrystia Freeland will deliver the fall economic statement in the House of Commons around 4 p.m. local time in Ottawa, after markets close.

The fall economic statement should have a full accounting of pandemic spending so far, and the depth of this year’s deficit, which in July was forecast at a historic $343.2 billion amid the COVID-19 pandemic.

Estimates vary of how deep a deficit the Liberals will unveil today, with a Scotiabank report Friday saying a range of $400 billion to $450 billion is possible given the government’s minimal reporting and mixed political signals.

Observers are keeping a close eye on how much spending space new promises take up, which could limit the capacity for the government to spend in next year’s budget before deficits become permanent.

The government is expected to reveal a small step today towards a national child-care system.

The government is also under some pressure to produce targeted aid for industries like travel and restaurants that may take longer to recover from the pandemic.

NDP Leader Jagmeet Singh said any sector-specific support must come with strings attached to ensure funding flows to the benefit of workers rather than shareholders or executives.

He noted his concern over the ballooning federal debt, but reiterated his call for a wealth tax on individuals with fortunes topping $20 million and a “pandemic profiteering tax” on companies rather than fiscal anchors on public spending.

“There’s been record profits, massive amounts of wealth increase on the part of the wealthiest in Canada,” Singh said.

“This government has to get serious about asking the wealthy to pay their fair share.”

He also drove home his push for enhanced child care, universal pharmacare and ending for-profit long-term care homes.

In a similar appearance Sunday, anticipating the release of the update today, Conservative Leader Erin O’Toole was more hawkish about the state of the treasury but also said he wants to see supports for businesses that are still suffering badly.”

“We do want to see a plan for the state of the finances, which they’ve been hiding for months,” he said.

“We’ve almost gone two years without a budget, the longest time in Canadian history. I want to see a plan for getting Canadians working helping some sectors like tourism and others that are on the edge.”

The Bank of Canada has forecast an economic decline of about 5.5 per cent in 2020, followed by growth of nearly four per cent on average in 2021 and 2022. However, the numbers will hinge in part on the extent of the pandemic and its repercussions for corporate revenue and consumer confidence.

This year’s projected $342-billion deficit amounts to 16 per cent of the country’s GDP, the largest shortfall since the Second World War.

Despite the soaring figures, Green Leader Annamie Paul rejected the idea of fiscal guardrails during a crisis more explicitly than her opposition counterparts.

“I think that having a fiscal anchor at this moment is a fiscal fantasy, which is why you have not seen that in other major economies,” she said, citing “far too many unknowns” about the pandemic’s trajectory.

“We don’t want to end up in a penny-wise, pound-foolish situation which is what happens when you under-invest in protecting people during crises like these.”

Paul also said one condition of a possible airline bailout should be companies’ participation in a national “carbon budget” that would set a cap on greenhouse-gas emissions.

This report by The Canadian Press was first published Nov. 30, 2020.

The Canadian Press

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