The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, has released Budget 2022: A Plan to Grow Our Economy and Make Life More Affordable.
In presenting what she described as a “responsible and considered” federal plan, she said “Budget 2022 is about growing our economy, creating good jobs, and building a Canada where nobody gets left behind. Our plan is going to mean more homes and good-paying jobs for Canadians; cleaner air and cleaner water for our children; and a stronger and more resilient economy for years to come.”
On paper, Canada is doing well as it navigates what is hopefully the last gasps of the pandemic. The nation has seen the best jobs recovery in the G7, having recovered 112 per cent of jobs lost due to COVID-19 lockdown measures, and the country boasts an unemployment rate that sits at just 5.5 per cent—close to the 5.4 per cent low in 2019 that was Canada’s best in five decades.
Here are some plan highlights:
Making Life More Affordable: The plan introduces the Tax-Free First Home Savings Account. Starting in 2023, first-time home buyers will be able to save up to $40,000 in a new account, with tax-deductible contributions of up to $8,000 per year. Withdrawals and investment growth within the account will be tax-free.
Budget 2022 doubles the First-Time Home Buyers’ Tax Credit and invests $4 billion over the next five years to launch a new fund in the Canada Housing and Mortgage Corporation to help cities and municipalities create more affordable housing, plus $1.5 billion over two years to the CMHC’s Rapid Housing Initiative for 6,000 new affordable housing units with at least one-quarter of the funding dedicated to women-focused projects.
Investing in Canadians: the Government says it is investing in skills development training and availability for both Canadian workers and immigrants. It plans to make significant further investments in affordable childcare, reducing the backlogs of surgeries and medical procedures in our public health care system, and advancing reconciliation with Indigenous peoples ($4 billion over six years, starting in 2021-22, will be allocated to removing systemic barriers to First Nations children receiving services in health, education and social services).
It will also allocate $5.3 billion over five years starting in 2022-23 and $1.7 billion ongoing to Health Canada to provide dental care to Canadians as a result of the Liberal-NDP agreement. The plan will start with children under 12 in 2022 at an initial cost of $300 million.
Investing in Economic Growth and Innovation: Budget 2022 builds off of Budget 2021’s historic investments in early learning and childcare—which could increase real GDP by as much as 1.2 per cent over the next two decades—and includes further investments to make Canada’s economy both stronger and more innovative.
These include a new Canada Growth Fund that aims to attract tens of billions of dollars in private investment in Canadian industries and Canadian jobs, and up to $3.8 billion for Canada’s first Critical Minerals Strategy to create thousands of good jobs and capitalize on a growing need for the minerals used in everything from phones to electric cars. Measures also include steps to build more resilient supply chains, to cut taxes for Canada’s growing small businesses, and to drive the creation, and ensure the protection, of Canadian intellectual property.
Budget 2022 also introduces a permanent 1.5 percentage point increase in the corporate income tax rate of banking and life insurance groups on taxable income above $100 million.
It invests $1 billion over five years, starting in 2022-23, to create an independent federal innovation and investment agency.
And it provides more than $8 billion in new funding to better equip the Canadian Armed Forces, strengthen Canada’s contributions to core alliances like NATO and NORAD, and reinforce Canada’s cyber security.
Investing in a Clean Economy: The plan aims to hasten the global transition to a clean economy through new incentives for the development of clean technologies and carbon capture, utilization, and storage.
The plan pledges more than $3 billion in funding to make zero-emission vehicles more affordable and build a national network of charging stations and will create the Canada Growth Fund to help attract tens of billions of dollars in private capital towards building a net-zero economy by 2050.
According to their media release, the Federal Government says Canada entered the pandemic with the lowest net debt-to-GDP ratio of all G7 countries, an advantage that has since increased relative to other countries.
“With Budget 2022,” adds the release, “Canada will maintain this leading position, while also seeing the second fastest recovery in the G7 by the end of this year. Crucially, it upholds the government’s fiscal anchor—a declining debt-to-GDP ratio and the unwinding of COVID-19-related deficits, which will ensure that Canada’s finances remain sustainable in the long-term.”
Local leaders respond
Greater Victoria is grappling with many of the same issues as other cities across Canada: rising housing prices, supply challenges, labour market shifts and climate change related weather damage.
Douglas asked three local business leaders for their response to Budget 2022, and all spoke to the housing crisis and how it addresses those challenges.
South Island Prosperity Partnership CEO Emilie de Rosenroll says “the initiatives being introduced to address rising costs of housing in Canada are encouraging. SIPP has been pointing to the systemic barrier of housing availability and affordability as a major constraint to our local economy–leading to labour issues and loss of talent. We hope that these initiatives, when combined with made-in-BC policies at the provincial and municipal levels, we can begin to get a handle on this crippling issue in the near future.”
WestShore Chamber of Commerce Executive Director Julie Lawlor agrees. “We’re pleased to see that the 2022 federal budget is taking steps to address housing affordability,” she says. “Businesses in the WestShore and across the region are struggling to attract and keep workers because there are an increasing number of people who cannot afford to stay here, let alone move here.”
Greater Victoria Chamber of Commerce CEO Bruce Williams notes “Federal Finance Minister Chrystia Freeland seems to understand that housing supply is at a critical point in this country. That’s certainly true for Greater Victoria and we look forward to seeing the details of how the $4 billion Housing Accelerator Fund will lead to more homes.”
Williams adds “private sector growth is creating revenue for government, which helped keep the deficit lower than expected. However, recovery has been uneven, and this budget has little to offer hard-hit sectors such as tourism. We can’t afford to lose businesses that serve the sector and we had hoped to see relief funding for tourism continue until the industry is back on solid footing.
“There are also significant investments in the environment and the military. More than $12 billion over five years to reduce emissions is welcome news, but still short of where we need to get. The military is getting $8 billion in new money and we’re hopeful we’ll see some of that here as investment in CFB Esquimalt.”