Federal budget for 2022 | Rising military spending and investment in housing

Ottawa. Canadian Finance Minister Chrystia Freeland will present her second budget this Thursday in an economic context marked by rising inflation, the war in Ukraine and a call to action to combat climate change. If revenues exceed expectations, the Trudeau government will use a portion of the proceeds to meet the terms of the NDP deal. Here is a brief overview of the measures to be taken into account in the budget.

Posted at 9:00 am.

Joel-Denis Bellavans

Joel-Denis Bellavans
Press

Rising military spending

Russia’s invasion of Ukraine on February 24 forced the Trudeau government to revise the country’s military spending upwards. For years, Canada has been criticized for not meeting the NATO standard for defense spending, equivalent to 2% of its GDP. Canada currently spends 1.39% of its GDP, or about $24 billion, on these purposes. Defense Minister Anita Anand presented her financial counterpart with three scenarios, one of which would achieve the 2% target this year. This would mean an annual increase in the national defense budget of about $15 billion. Mme For now, Freeland will cut the pear in half by immediately raising $8 billion to buy new military equipment, among other things, according to the CBC Network.

Climate change


PHOTO MARTIN TREMBLAY, PRESS

Ottawa is offering a $5,000 grant to purchase a zero emission car.

Last week, the Trudeau government unveiled a plan to reduce greenhouse gas (GHG) emissions by at least 40% by 2030 from 2005 levels. The plan is worth $9.1 billion. Some of the measures were detailed, including a $2.2 billion fund to help provinces, municipalities, businesses, educational institutions and Indigenous organizations finance “the fight against climate change.” The plan also includes $1.7 billion to reduce the cost of buying electric vehicles. Details of this measure will be announced on Thursday. Ottawa is already offering a $5,000 grant to purchase a zero-emission car. The Trudeau government is betting on electrification of transport to cut greenhouse gas emissions.

National Dental Care Program

In an agreement he reached with the New Democratic Party (NDP) last month, Prime Minister Justin Trudeau pledged to implement certain measures dear to Jagmeet Singh’s troops. This list includes the creation of a national dental care program for the less fortunate. The NDP requires that the foundations of this program be laid now through the provision of dental care to children under 12 years of age. Subsequently, the program is expected to be expanded to children under 18, the elderly and people with disabilities in 2023, and then fully implemented in 2025. The program will be limited to families with incomes below $90,000 per year, while people with annual incomes below pay no copay. Ultimately, this program is expected to cost $1.5 billion a year. The NDP is also demanding that Ottawa move forward with the national drug insurance program.

social housing


PHOTO Alain ROBERGE, LA PRESS ARCHIVE

Financial support will be provided to cities that want to build social housing faster.

Soaring property prices across the country have become an inevitable problem in Ottawa. The Trudeau government is under intense pressure to propose new measures to ease access to property. According to the CTV network, the Trudeau government will impose a two-year moratorium on the purchase of real estate by foreign investors and new measures totaling 10 billion over five years. In the deal with the NDP, the Liberals pledged to invest new money in the Rapid Housing Initiative, a program that provides financial support to cities that want to build social housing faster. This program had an envelope of 1.5 billion last year. The agreement also provides for a one-time $500 surcharge on Canadian Housing Assistance Allowance, a measure that could affect approximately 300,000 Canadians. In the House of Commons on Wednesday, Justin Trudeau vowed that new measures for housing would be included in the budget.

Medical transfers

The request from the province is not new. They are calling for an immediate increase in health care transfers of about $26 billion a year. Such an increase would mean that Ottawa pays about 35% of health care bills, up from 22% today. Provinces say the pandemic has strained the network across the country. But the Trudeau government’s response remained the same: not immediately. Justin Trudeau has promised his provincial counterparts to negotiate higher transfers, but only after the pandemic is over. Last month, the federal government offered $2 billion to provinces to help them resume operations delayed by the pandemic. During the last election campaign, the Liberals pledged to spend $6 billion to accelerate the elimination of queues in health care networks, as well as $3 billion to hire 7,500 family doctors and nurse practitioners.

Still significant deficits and new taxes

The Trudeau government has never proposed a balanced budget since taking office. He also never proposed a plan to return to a balanced budget. All indications are that the budgets for the next five years will still be in red ink. In his December Economic and Budget Bulletin, Minister Chrystia Freeland predicts the deficit will hit $58.4 billion in 2022-2023, then rise to $43.9 billion in 2023-2024 and $29.1 billion in 2024-2025. . Recall that in 2020-2021, the federal government recorded a record deficit of $327.7 billion due to the COVID-19 pandemic. The deficit is expected to be $144.5 billion in the last fiscal year, which ended March 31. But it may be lower due to good economic performance and rising commodity prices. The minister could follow through on the Liberals’ pledge to impose a 3 percent surcharge on more than $1 billion a year in profits from banks and insurance companies.

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