Deputy Prime Minister and Minister of Finance Chrystia Freeland listens to a question from a reporter on the phone during a news conference in Ottawa, Monday, Nov. 30, 2020. THE CANADIAN PRESS/Adrian Wyld

Deputy Prime Minister and Minister of Finance Chrystia Freeland listens to a question from a reporter on the phone during a news conference in Ottawa, Monday, Nov. 30, 2020. THE CANADIAN PRESS/Adrian Wyld

Spending too little worse than spending too much, Freeland says as Canada’s deficit tops $381B

‘The risk of providing too little support now outweighs that of providing too much’

Finance Minister Chrystia Freeland’s first fall mini-budget finds new funds for families and businesses and scratches a longtime provincial itch over transfer payments as she tries to find a delicate balance between pandemic anxiety and political prudence.

Freeland defended the federal government’s record deficit of more than $381 billion as affordable — given low interest rates — and necessary and accused the former Conservative government of withdrawing stimulus too quickly after the last recession 12 years ago.

“As we have learned from previous recessions, the risk of providing too little support now outweighs that of providing too much,” Freeland said.

“We will not repeat the mistakes of the years following the Great Recession of 2008.”

However Freeland responded to calls for some sense of when the federal largesse will end only by promising what she calls “fiscal guardrails” based on employment numbers, to guide when post-pandemic federal stimulus will start to be phased out.

“These data-driven triggers will tell us when the job of building back from the COVID-19 recession is accomplished, and we can bring one-off stimulus spending to an end,” Freeland said.

Freeland is also using the fall update to respond to calls from numerous political critics and interest groups with funds for parents of young children, aid for hard-hit sectors like tourism and entertainment, and another $1 billion to help provinces with the long-term care homes that have left our oldest citizens tragically vulnerable to COVID-19.

Fully aware that the Liberal government needs support from at least one other party to stay alive she handed the NDP another win by extending the federal interest holiday for student and apprentice loans through to the end of the next fiscal year. The Liberals stopped requiring interest payments earlier this year but that holiday ended Oct. 1.

A week ago the House of Commons unanimously backed a motion from NDP MP Heather McPherson to extend the interest-free period through to the end of next May. Freeland is going even further and eliminating the interest on the federal portion of the Canada Student Loan and Canada Apprenticeship Loan programs for all of 2021-22.

Thus far the NDP has been the only party showing a willingness to negotiate with the government to support it during confidence measures. In September the NDP supported the throne speech after succeeding in getting the Liberals to include paid sick leave and increased pandemic aid to individuals.

Freeland also threw out another olive branch in Ottawa’s often difficult with provincial premiers by promising to answer their years-long call to overhaul the fiscal stabilization fund that sends federal cash to provinces facing serious drops in revenue. The program offers federal aid to provinces that see a drop in non-resource related revenues of more than five per cent compared to the year before, or more than a 50 per cent drop in resource revenues. But the payments have been capped at $60 per person in a province for more than three decades.

The premiers made the program the target of a request to the federal government almost exactly a year ago, issuing a joint statement out of their December meeting in 2019 for the fiscal stabilization fund to be changed. Freeland’s office said at the time she was open to a discussion about it.

The issue has been particularly acute for Alberta Premier Jason Kenney, whose province accessed the program in 2015-16 and 2016-17, during a significant drop in oil prices. The province received $251 million in each of those years. Freeland intends to increase the payments to $170 per person retroactive to 2019-20, and will index the amount in line with economic growth going forward. There will be other changes to the program, including how eligibility is calculated.

Alberta would get more than $700 million under the program if it qualified now.

When the premiers made their call, the expectation was no province would face a serious downturn in 2020. Nobody knew the virus that would cause the COVID-19 pandemic was already starting to spread in China. Alberta alone is projecting a revenue drop of more than 10 per cent now.

Mia Rabson, The Canadian Press

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

Coronavirusfederal government

Just Posted

Vehicles line up for the Greater Vancouver Drive-Thru Food Truck Festival at the Chilliwack Coliseum parking lot on March 27. The touring event comes to Abbotsford this weekend, May 15 and 16. (Photo: Jenna Hauck/Chilliwack Progress)
Drive-Thru Food Truck Festival takes place in Abbotsford

Event runs May 15 and 16 at Tradex, featuring 12 trucks each day

Mandarin Garden in Abbotsford had two event tents set up for outdoor dining. One of the tents, valued at more than $5,000, was stolen early Friday morning (May 14). (Submitted photo)
UPDATE: Dining tent stolen from Abbotsford restaurant is located

Owner says it would have cost more than $5,000 to replace the rented event tent

Chilliwack prolific offender Brian Stephan was wanted in late April 2021, but was arrested and charged after allegedly stealing a vehicle in Mission on May 5 and resisting arrest in Chilliwack. (RCMP file)
Wanted Chilliwack prolific offender arrested yet again

Brian Stephan allegedly stole a vehicle in Mission, committed a B&E, resisted arrest in Chilliwack on May 5

Trina Hunt's remains were found in the Hope area on March 29. Her family is asking the public to think back to the weekend prior to when she went missing. (Photo courtesy of IHIT.)
Cousin of missing woman found in Hope says she won’t have closure until death is solved

Trina Hunt’s family urges Hope residents to check dashcam, photos to help find her killer

The new emergency department at Abbotsford Regional Hospital and Cancer Centre is slated to open June 8. (Screenshot from Province of BC video)
Expanded emergency department slated to open in June at Abbotsford Regional Hospital

Project cost $15 million with an additional $1.25 million donated for equipment

Daily confirmed COVID-19 cases reported to B.C. public health, seven-day rolling average in white, to May 12, 2021. (B.C. Centre for Disease Control)
B.C. preparing ‘Restart 2.0’ from COVID-19 as June approaches

Daily infections fall below 500 Friday, down to 387 in hospital

Bradley Priestap in an undated photo provided to the media some time in 2012 by the London Police Service.
Serial sex-offender acquitted of duct tape possession in B.C. provincial court

Ontario sex offender on long-term supervision order was found with one of many ‘rape kit’ items

Rich Coleman, who was responsible for the gaming file off and on from 2001 to 2013, was recalled after his initial testimony to the Cullen Commission last month. (Screenshot)
Coleman questioned over $460K transaction at River Rock during B.C. casinos inquiry

The longtime former Langley MLA was asked about 2011 interview on BC Almanac program

Steven Shearer, <em>Untitled. </em>(Dennis Ha/Courtesy of Steven Shearer)
Vancouver photographer’s billboards taken down after complaints about being ‘disturbing’

‘Context is everything’ when it comes to understanding these images, says visual art professor Catherine Heard

Chief Public Health Officer Theresa Tam listens to a question during a news conference, in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Restrictions will lift once 75% of Canadians get 1 shot and 20% are fully immunized, feds say

Federal health officials are laying out their vision of what life could look like after most Canadians are vaccinated against COVID-19

Mike Farnworth, pre-pandemic. (File photo)
Surrey Police recruitment not distracting cops from shootings, Farnworth says

‘That’s simply not the case,’ Public Safety Minister Mike Farnworth told the Now-Leader on Friday

Police are at Ecole Mount Prevost Elementary but the students have been evacuated. (Kevin Rothbauer/Citizen)
Gardener finds buried explosives, sparking evacuation of Cowichan school

Students removed from school in an ‘abundance of caution’

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Most Read