Feds propose $101 billion in new spending including child care, small business, COVID relief and raising minimum wage to $15

The Trudeau government has proposed more than $101 billion in net new spending over the next three years in a federal budget that promises nearly $30 billion for child care and early learning by 2026 and billions more each year after that for provinces, territories, and Indigenous partners.

The aim is to cut fees for regulated spaces by 50 per cent by next year, and to reach a $10 daily average by 2026, with Finance Minister Chrystia Freeland promising legislation by this autumn in response to the pandemic “she-cession” that has seen thousands of women leave the workforce.

The first federal budget in more than two years also proposes an additional $30 billion in COVID-18 support programs for hard-hit workers and businesses – including an extension of wage and rent subsidies until the end of September. And publicly traded corporations that receive the wage subsidy while boosting executive compensation will have to repay the equivalent, starting in early-June.

Also, the Canadian government proposes to expand the Canada Workers Benefit, to invest $8.9 billion over six years in additional support for low-wage workers – extending income top-ups to about a million more Canadians and lifting nearly 100,000 people out of poverty. And this budget will introduce a $15 an hour federal minimum wage.

Also in today’s budget:

• $7 billion on targeted tax incentives, grants and loans to help small- and medium-sized businesses adapt and expand their digital operations after the pandemic. The plan includes hiring 28,000 young Canadians to help businesses adapt to new technology.

• $3 billion over five years to improve standards for long-term care across the provinces and territories. • Legislation to implement a $15 minimum wage in federally regulated sectors.

• A one-time $500 top-up payment in August to Old Age Security recipients 75 and older who faced extra pandemic costs. And a promise those same seniors will receive a 10-per-cent increase in OAS payments as of July 2022.

• Nearly $9 billion over six years to expand the Canada Workers Benefit to one million low-wage workers.

• $300M to fund Black-led initiatives to fight racism and support Black-led non-profit organizations.

• $3.8 billion in new and existing funding to build, repair, or convert 35,000 affordable housing units.

• $8.8 billion in “green recovery” and environmental spending, including the “Net Zero Accelerator” that supports emissions-reducing projects, support to help clean-tech companies scale up and compete globally, electric vehicle charging stations, and federal building retrofits.

• A proposed 1% annual tax on the value of non-resident, non-Canadian owned residential real estate considered to be vacant or underused.

• A proposed 3% digital services tax on revenue that global web giants generate from Canadian sales and data.

• A new luxury tax would apply to luxury cars and personal aircraft over $100,000 and personal boats above $250,000.

The past year’s deficit is now projected at $354.2 billion, with the federal debt-to-GDP ratio at 49%. For 2021-22: a projected $154.7-billion shortfall, with debt-to-GDP ratio rising to 51.2%. However, the Finance department warned that a third-wave pandemic slowdown could add $15 billion to this year’s deficit.

The Trudeau government will focus on “unwinding COVID-related deficits and reducing the federal debt as a share of the economy over the medium term” as a new fiscal anchor.

And as for fiscal guardrails and concern the economic recovery has tempered the need for massive stimulus spending, the budget document argues: “A comprehensive range of indicators show that the Canadian economy is still far from seeing a strong labour market with broadly shared benefits.”

Asked about the danger of rising interest rates to the government’s debt-financed plans, Freeland told reporters this afternoon she believes the greater danger to Canada’s economic and fiscal health is not properly investing in long-term growth.

Help for young Canadians

Freeland also said Canada will invest in its youth. “One of the most striking aspects of the pandemic has been the historic sacrifice young Canadians have made to protect their parents and grandparents. Our youth have paid a high price to keep the rest of us safe.

“We cannot, and we will not, allow young Canadians to become a lost generation. They need our support to launch their adult lives and careers in post-COVID Canada – and they will get it. We will invest $5.7 billion over five years in Canada’s youth,” said Freeland.

“We will make college and university more accessible and affordable. We will create job openings in skilled trades and high-tech industries. And we will double the Canada Student Grant for two more years, while extending the waiver of interest on federal student loans through March 2023. More than 450,000 low-income student borrowers will also have access to more generous repayment assistance.

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