This year’s federal budget process was expected to be divisive due to the ongoing COVID-19 pandemic and the possibility of another election, but opposition member Eric Melillo says he still wasn’t expecting to see the national deficit reach over $354 billion.
“There’s lots of spending in it, and that’s where my major concern is,” said Kenora MP Eric Melillo.
Deputy Prime Minister and Finance Minister Chystia Freeland released Budget 2021: A Recovery Plan for Jobs, Growth and Resilience on April 19, which lists protecting the health and safety of Canadians as Ottawa’s top priority, with about $100 billion in new spending.
“Trudeau has now added more debt than every previous Prime Minister combined,” adds Melillo. “There’s no plan to reduce that deficit and get back to balance. That’s concerning to me. I do worry about what this will mean for future generations who will inevitably have to pickup that tab.”
Canada’s deficit is expected to reach $354.2 billion in 2021-2022 before falling to $154.7 billion in 2022-2023, with gradually declining deficits through 2025-2026, where it's estimated to be at about $30.7 billion. Surprisingly, $354 billion is less than the $381 billion that Ottawa originally expected.
Melillo, who also serves as the Shadow Minister of Northern Development and FedNor, notes Ottawa will be on the hook for about $40 billion each year in interest costs, nearly the same amount that’s spent on healthcare transfers across the country.
Prior to the COVID-19 pandemic, this year’s deficit was projected to be $19.7 billion as of the 2019 budget. As of Canada’s 2020 fall economic update, in the midst of the second wave of the virus, the deficit was updated to $381.6 billion – a difference of $361.9 billion, largely due to COVID-19.
Initiatives of the 739-page plan include creating an additional 1 million jobs in Canada by the end of the year, to build 35,000 new homes, a green energy recovery program and the development of a national early learning and childcare system.
The $30 billion childcare initiative aims to reduce fees for parents with children in childcare by 50 percent on average by 2022, with a goal of reaching $10 per day on average by 2026, everywhere outside of Quebec. It also aims to bring more women into the workforce with $8.3 billion yearly investments.
The budget also plans to extend the COVID-19 wage subsidy, rent subsidy and lockdown supports through the end of September, with plans to gradually begin reducing payments by July. Although, they could be extended through November if required.
Other supports include an extension of the maximum period of employment insurance sickness benefits from 15 weeks to 26 weeks, a $15 federal minimum wage, the doubling of Canada Student Grants and more grants and supports for businesses affected by the pandemic.
However, the budget fails to include the Liberal Party’s proposed Universal Basic Income project, discussed earlier this month at a Liberal policy convention. The resolution, co-sponsored by the Liberal party, passed by an overwhelming 491-85 vote. It would provide Canadians with a certain amount of earnings each month.
The Liberal Party’s long-promised national pharmacare program also wasn’t introduced in this year’s proposal – an initiative the party has been promising since the 2019 budget.
This year’s budget was Deputy Prime Minister and Minister of Finance Chystia Freeland’s first, after taking on the Finance Minister portfolio last year following Minister Bill Morneau’s resignation. As well, 2020’s budget was pushed back due to the onset of the COVID-19 pandemic.