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

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Toronto Public Health nurse Lalaine Agarin makes preparations at Toronto’s mass vaccination clinic, Jan. 17, 2021. THE CANADIAN PRESS/Frank Gunn
3 deaths, 234 new cases of COVID-19 in Interior Health over the weekend

One death connected to outbreak at Kamloops’ Royal Inland Hospital, where 20 patients and 28 staff have tested positive

The trial of Harry Richardson began Monday at the Nelson courthouse. File photo
Trial of man accused of shooting RCMP officer near Argenta in 2019 begins

Harry Richardson is facing five charges in a Nelson courtroom

Gerald Cordeiro of Kalesnikoff Lumber Ltd. says the company is looking for a non-profit organization to take over and run its proposed agroforestry project. Photo: Bill Metcalfe
Logging company proposes agroforestry project for Nelson area

Kalesnikoff Lumber is floating the idea of growing trees in conjunction with food crops

Zaudanawng “Jay-Dan” Maran in his Creston home. Hanging on the wall behind him is a logo of Kachin’s Manaw festival. Photo: Aaron Hemens
From Myanmar to Creston: The story of a refugee

In October 2007, Zaudanawng “Jay-Dan” Maran and his friends encountered a woman being sexually assaulted by two Myanmar soldiers.

Crews with Discovery Channel film as an Aggressive Towing driver moves a Grumman S2F Tracker aircraft around a 90-degree turn from its compound and onto the road on Saturday, Jan. 23, 2021. It was the “most difficult” part of the move for the airplane, one organizer said. (Jenna Hauck/ Chilliwack Progress)
VIDEO: Vintage military plane gets towed from Chilliwack to Greater Victoria

Grumman CP-121 Tracker’s eventual home the British Columbia Aviation Museum on Vancouver Island

Kamloops This Week.
48 COVID-19 cases and one death associated with outbreak at Kamloops hospital

One of the 20 patients infected has died, meanwhile 28 staff with COVID-19 are isolating at home

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

Rolling seven-day average of cases by B.C. health authority to Jan. 21. Fraser Health in purple, Vancouver Coastal red, Interior Health orange, Northern Health green and Vancouver Island blue. (B.C. Centre for Disease Control)
2nd COVID vaccine doses on hold as B.C. delivery delayed again

New COVID-19 cases slowing in Fraser Health region

Provincial health officer Dr. Bonnie Henry talk about the next steps in B.C.’s COVID-19 Immunization Plan during a press conference at Legislature in Victoria, B.C., on Friday, January 22, 2021. Two more cases of the COVID-19 strain first identified in South Africa have been diagnosed in British Columbia, bringing the total to three as of Jan. 16.THE CANADIAN PRESS/Chad Hipolito
B.C. now has three cases of South African COVID-19 variant, six of U.K. strain

Both variants are thought to spread faster than earlier strains

Rodney and Ekaterina Baker in an undated photo from social media. The couple has been ticketed and charged under the Yukon’s <em>Civil Emergency Measures Act</em> for breaking isolation requirements in order to sneak into a vaccine clinic and receive Moderna vaccine doses in Beaver Creek. (Facebook/Submitted)
Great Canadian Gaming CEO resigns after being accused of sneaking into Yukon for vaccine

Rod Baker and Ekaterina Baker were charged with two CEMA violations each

Police discovered a makeshift nightclub in a Vancouver apartment on Jan. 23, 2021, and say it wasn’t the first time this month officers have been called to the unit over social gathering concerns. (Phil McLachlan - Capital News)
Doorman of makeshift ‘booze-can’ in Vancouver apartment fined; police look to court order

This marks the fourth complaint about social gatherings inside the apartment in January

A Kelowna couple welcomed their Nooner baby in December. (Flytographer)
Kelowna couple welcomes baby girl from Hotel Zed Nooner campaign

Nicole and Alex will now have 18 years of free stays at the hotel

Kyrell Sopotyk was drafted by the Kamloops Blazers in 2016 and played two seasons with the Western Hockey League club. (Photograph By ALLEN DOUGLAS/KTW)
Kamloops Blazer paralyzed in snowboarding accident sparks fundraiser for family

As of Jan. 24, more than $68,000 had been raised to help Kamloops Blazers’ forward Kyrell Sopotyk

Most Read