Canada has largely recovered from economic damage inflicted by COVID-19: Finance Minister Freeland

WHILE releasing the Economic and Fiscal Update 2021 on Tuesday, Chrystia Freeland, Deputy Prime Minister and Minister of Finance, said that Canada has largely recovered from the economic damage inflicted by COVID-19 and is poised for robust growth in the months to come.

She pointed out: “The pandemic triggered the steepest economic contraction in Canada since the Great Depression. At its worst, it cost 3 million Canadians their jobs as our GDP shrank by 17 per cent.”

Freeland said that Canada has now surpassed its target of creating a million jobs. “In fact, we have recovered 106 per cent of the jobs lost at the peak of the pandemic, significantly outpacing the U.S. where just 83 per cent of lost jobs have been recovered so far,” she added.

Freeland said: “From the start, we have understood that few things are more central to the economic wellbeing of Canadians than having a job. That is why our investments have been so singularly focused on employment, and why Canada has experienced the second fastest jobs recovery in the G7.

“Our GDP has already returned to near pre-pandemic levels. Our GDP growth of 5.4 per cent, in the third quarter, outpaced the U.S., the U.K., Japan, and Australia. OECD projections suggest that, by 2023, Canada’s recovery will be the second fastest in the G7.”

She added: “Today’s update shows that the size of the Canadian economy this year will be $2.48 trillion. When we published our forecast in the 2018 budget, that is almost exactly the size we expected our economy would have grown to by this year. And we made that forecast when none of us had any idea our economic growth and our lives would be so deeply disrupted by COVID-19.

“Canada posted a $25.1 billion surplus in our trade in goods in October, as our exports rose. Fewer businesses went bankrupt over the past year than in 2019, before the pandemic. In fact, there are now an additional 6,000 active businesses in Canada compared to before the pandemic.”

Freeland said the Economic and Fiscal Update includes targeted investments that will ensure Canada has the weapons we need to finish the fight against COVID-19.

She added: “First, we are protecting children with pediatric vaccines, now available for free for all children 5 and over. Booster shots are free for all Canadians, too, just as first and second doses have been. And Omicron makes boosters more urgently important than ever.”

She said: “We are investing in new anti-viral drugs for COVID-19 patients that prevent hospitalizations and will save lives. We are investing in ventilation improvements, to help prevent outbreaks at schools and workplaces.”

Freeland pointed out: “To date, our government has delivered nearly 86 million rapid tests to provinces, territories and Indigenous communities, free of charge. This fiscal update sets aside a further $1.7 billion, enough to procure more than 180 million additional rapid tests. Rapid tests are a useful tool in the intensifying fight against Omicron. We are buying and distributing them; we encourage Canadians to use them. And we are providing support to provinces and territories for proof of vaccination credentials.”

She added: “We are provisioning an additional $4.5 billion to pay for possible further costs of fighting Omicron and other COVID-19 surges, including spending on border measures and income and business supports.’

Freeland said: “Household employment income is now 7 per cent above its pre-crisis level. And Canadians have used this difficult time to pay down their personal debt relative to their income.

“Our recovery from the COVID-19 recession has significantly surpassed Canada’s recovery from the 2008 recession. We have already more than recovered lost jobs, a healing which took eight months longer after the much milder 2008 recession. And we are on track to recover lost GDP five months more quickly than after the 2008 contraction.”

Freeland announced that the government was committing to provide Guaranteed Income Supplement or Allowance beneficiaries who also received the Canada Emergency Response Benefit with a one-time payment to alleviate the financial hardship they may have faced as a result of an unintended interaction between the two benefits.

She said the government was laying out a plan to provide debt relief to students who need to repay the Canada Emergency Response Benefits they were not eligible for by proposing to offset their debt with the Canada Emergency Student Benefit amount for which they were eligible.

The government is proposing to establish the $60 million Canada Performing Arts Workers Resilience Fund which will support new or enhanced sector-led and -delivered initiatives that improve the economic, career, and personal circumstances of live performance arts workers, including independent contractors.

Freeland said that the federal government now has childcare deals with nine provinces and one territory.

“Within five years, Canadians will proudly rely on $10-a-day child care just as our universal publicly accessible health care system has come to define us as a society. This is an historic accomplishment which will transform the life of every parent in Canada — and of every future parent in Canada, for generations to come,” she added.

Freeland said the government is committed to bringing in 411,000 immigrants in 2022, the highest number in Canadian history. “To help support this effort and reduce processing time for permanent and temporary resident and citizenship applications, we are investing $85 million in our immigration system,” she said.

Freeland said housing affordability remains a priority for the government. Se added: “We will take further action in the upcoming budget. As we announced in the spring budget, on January 1, 2022, our government will apply Canada’s first national tax on vacant property owned by non-resident, non-Canadians.”

Regarding climate change, Freeland noted that recent and tragic floods in British Columbia devastated homes, farms, and critical infrastructure, and further disrupted supply chains. Severe droughts, including across our Prairies, have contributed to increases in food prices.

She added: “We are taking action to fight climate change. Canada has a world-leading price on pollution that is helping to lower emissions and grow a cleaner economy. In fact, as many countries in the world look to up their level of ambition they are seeing inspiration in our plan. We are also working to finalize Canada’s first National Adaptation Strategy by the end of next year.”

Freeland said: “This update reports a deficit of $327.7 billion for the last fiscal year and of $144.5 billion for this fiscal year. This compares favourably to our forecast of $354.2 billion and $154.7 billion, respectively, in the April budget. Our debt-to-GDP ratio in the last fiscal year was 47.5 per cent. It will peak at 48.0 per cent this fiscal year and then fall steadily, as will the deficit. This contrasts positively with our prediction in the April budget that the debt-to-GDP ratio would be 49 per cent in the last fiscal year and that it would then peak at 51.2 per cent in the current fiscal year, before declining.

“In Budget 2021, we forecast that, in this fiscal year, 42 per cent of our bond issuance would be long-term debt of 10 years or more. Today, we can forecast it will be 45 per cent. In 2019, only 15 per cent of our debt was locked in over a long-term horizon. Pushing more of our debt into bonds with a longer maturity ensures that Canada’s debt servicing costs are sustainable. Thanks to an improving fiscal outlook, the amount of money we will need to issue in borrowings this year is $35 billion lower than forecast in Budget 2021. Despite a necessary and unprecedented level of spending to support Canadians during COVID-19, our public debt charges as a share of GDP will be the same this year and next year as they were in 2018-19.”

Freeland said: “This fiscal update includes a provision to settle the cases on harm to First Nation children currently before the Canadian Human Rights Tribunal and to invest in transforming the services offered to First Nation children and their families. We have provisioned $20 billion for compensation and $20 billion to improve the system going forward.

“The Government of Canada is working towards an agreement with the parties on this issue. We know that paying our historic debt to Indigenous Peoples is paramount, and that we must act to ensure these injustices do not happen again. We will not – and we cannot – evade this essential commitment. That is why we are today setting aside the funds to pay for it.”


Quick Facts

  • The Economic and Fiscal Update proposes new measures to see Canadians through the pandemic and support a robust and resilient recovery. These investments include:
    • $1.7 billion to increase access to rapid testing supplies across Canada, helping to identify cases early, break the chain of transmissions, and reduce outbreaks.
    • $2 billion to procure lifesaving COVID-19 therapeutics and treatments.
    • $100 million through the Safe Return to Class Fund and $10 million for First Nations on-reserve schools to improve ventilation in schools and protect students, teachers, school staff, and parents from outbreaks.
      • The government also proposes to expand the Eligible Educator School Supply Tax Credit so teachers can claim a refundable tax credit worth 25 per cent (up from 15 per cent) of up to $1,000.
    • $70 million to support ventilation projects in public and community buildings like hospitals, libraries, and community centres.
    • The proposed new Small Businesses Air Quality Improvement Tax Credit of 25 per cent of the cost of upgrading ventilation systems and air filtration, up to $10,000 per location and $50,000 in total.
    • $60 million to support workers in Canada’s live performance industry through the new temporary Canada Performing Arts Workers Resilience Fund.
    • One-time payments to alleviate financial hardship of Guaranteed Income Supplement (GIS) and Allowance recipients who received the Canada Emergency Response Benefit (CERB) or the Canada Recovery Benefit (CRB) in 2020.
    • Provide debt relief to students who need to repay the Canada Emergency Response Benefits they were not eligible for by proposing to offset it with the amount they would have been eligible for under the Canada Emergency Student Benefit.
    • $50 million to help relieve supply chain congestion in Canada by launching a call for proposals under the National Trade Corridors Fund to assist Canadian ports with the acquisition of cargo storage capacity and other measures to alleviate congestion.
    • $85 million to reduce backlogs in Canada’s immigration system, speed up the process of citizenship, reunite families, and welcome people who can help address Canada’s labour shortages.