Prime Minister Justin Trudeau’s government is considering allocating billions of dollars in fixed spending annually to new programs that could be announced as early as next month, according to a senior government official.
Finance Minister Chrystia Freeland’s financial statement in late November could include details on government funding plans for child care, prescription drugs and other long-term priorities, the official said. This said, on condition of not being identified because they were not allowed to discuss the plan publicly.
The senior government official said that the Ministry of Finance is trying to determine the available fiscal space, but the government has yet to decide on any numbers. They cited 20 billion dollars as an example, accounting for less than 1% of economic output. A finance department spokesperson declined to comment.
If the plans go ahead, the fiscal update will mark the first time Trudeau’s government has set dollar value for the long-term ambitions set by the Prime Minister last month, aiming to bring in more funding. into social programs and green initiatives. It is a portion of spending that Ms. Freeland has committed to that is being tied to some sort of fiscal barrier, as opposed to the government’s “whatever is needed” approach to COVID-related emergency aid.
In July, the Government of Canada estimated its budget deficit would rise to $343 billion this year, or 16% of total economic output. Since then, it has announced an additional $40 billion in additional spending.
Ms. Freeland used his first keynote speech as Canada’s Finance Minister on Wednesday to enthusiastically defend those growing deficits and lay the basis for more post-pandemic spending “The risks of fiscal inaction outweigh the risks of fiscal action,” she told Toronto Global Forum. “Doing too little is more dangerous and can lead to more costly than doing too much.”
While details of the day care program have yet to be released, the federal government will let provinces choose to co-finance their spending, the official said. On the pharmaceutical front, Trudeau’s administration has yet to determine how narrow or broad the plan will be.
The official said the economic report is expected to be divided into two parts. The first will focus on emergency funding to help Canada get through the second round of COVID-19 cases, without a fixed budget due to the uncertain public health situation. The second section will detail the growth and post-pandemic spending that the government plans to fully budget for early next year.
In addition to pandemic support and long-term initiatives, there may be one-time funding for projects on climate change and the environment, the official said, citing funding for hydrogen fuel capacity, Green innovation and shipping.
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