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.
WATCH | Chrystia Freeland delivers fiscal update:
Finance minister presents fall fiscal update
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:
Erin O’Toole reacts to fiscal update
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 …….