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

The rebranding project under which the new logo and website have been launched, began in 2019. (Lakes District News photo)
Village of Burns Lake gets a new digital look

Launches its new logo and website

A room at the BC ALS Clinic in the dreary basement of GF Strong Rehabilitation Centre. (Greg Gowe photo/Lakes District News)
Hope through ALS clinincal trials needed in the province, says B.C. man

Greg Gowe, diagnosed with ALS calls on the government for better treatment options

The Chamber currently has a total of 136 members of which 16 joined in 2020 alone. (Laura Blackwell photo/Lakes District News)
Burns Lake & District Chamber of Commerce to host an open house in February

Has started making plans for events to host in 2021

Antoine Tom with the bake sale items that helped him raise $1,000. (Sabrina Tom photo/Lakes District News)
12-year-old local boy dubbed ‘kindness hero’

Raises money for classmate who lost his home

Village council meets in person, shares the meeting with the community via zoom. (Lakes District News photo)
Village council meets with newly installed plexiglass dividers

General public to continue attending meetings virtually

British Columbia Health Minister Adrian Dix looks on as Provincial Health Officer Dr. Bonnie Henry addresses the media during a news conference at the BC Centre of Disease Control in Vancouver B.C. (THE CANADIAN PRESS/Jonathan Hayward)
B.C. announces 485 new COVID-19 cases, fewest deaths in months

‘The actions we take may seem small, but will have a big impact to stop the virus,” urges Dr. Henry

Keith Thorpe/Peninsula Daily News
Search called off for small plane that went down in rough water south of Victoria

Plane bound for Port Angeles from Alaska believed to have one occupant, an Alaskan pilot

Royal B.C. Museum conservator Megan Doxsey-Whitfield kneels next to a carved stone pillar believed to have significance as a First Nations cultural marker by local Indigenous people. The pillar was discovered on the beach at Dallas Road last summer. Museum curatorial staff have been working with Songhees and Esquimalt Nation representatives to gain a clearer picture of its use. (Photo courtesy Royal BC Museum)
Stone carving found on Victoria beach confirmed Indigenous ritual pillar

Discussion underway with the Esquimalt and Songhees about suitable final home for the artifact

Former Vancouver Giants forward Evander Kane is seen here in Game 7 of the second round of the 2009 WHL playoffs against the Spokane Chiefs (Sam Chan under Wikipedia Commons licence)
Gambling debts revealed in details of bankruptcy filing by hockey star Evander Kane

Sharks left winger and former Vancouver Giants player owes close to $30 million total

Othman “Adam” Hamdan, pictured in front of Christina Lake’s Welcome Centre, was acquitted of terrorism related charges in 2017. He has been living in Christina Lake since November 2020. Photo: Laurie Tritschler
Man acquitted on terrorism charges awaits deportation trial while living in Kootenays

Othman Ayed Hamdan said he wants to lead a normal life while he works on his upcoming book

B.C. Premier John Horgan wears a protective face mask to help prevent the spread of COVID-19 prior to being sworn in by The Honourable Janet Austin, Lieutenant Governor of British Columbia during a virtual swearing in ceremony in Victoria, Thursday, November 26, 2020. THE CANADIAN PRESS/Jonathan Hayward
Premier Horgan calls jumping COVID vaccine queue ‘un-Canadian’

Horgan says most people in B.C. are doing their best to follow current public health guidelines

Prime Minister Justin Trudeau, left, and Vancouver Mayor Kennedy Stewart share a laugh while speaking to the media before sitting down for a meeting at City Hall, in Vancouver, on Friday August 30, 2019. (THE CANADIAN PRESS/Darryl Dyck)
Vancouver mayor, Health Canada to formally discuss drug decriminalization

Kennedy Stewart says he’s encouraged by the federal health minister’s commitment to work with the city

Downtown Fernie is pictured after a snowfall.

Most Read