As economy faces potential recession, Liberals to release 'tricky' budget Tuesday
The federal Liberals are set to unveil a budget on Tuesday intended to showcase their plans to keep Canada competitive amid the clean energy transition while supporting Canadians who are struggling with affordability.
Finance Minister Chrystia Freeland has promised to accomplish as much over the last few weeks, while also pledging to keep the budget fiscally restrained.
But that balancing act isn't expected to be easy. A slowing Canadian economy could weigh on government coffers.
"It's going to be very tricky for the federal government," said Randall Bartlett, a senior director of Canadian economics at Desjardins.
The Liberals are expected to invest considerably in Canada's clean energy transition, in an attempt to keep Canada competitive with the United States as it launches its own aggressive measures.
The Inflation Reduction Act, signed into law last August by U.S. President Joe Biden, invests nearly US$400 billion in everything from critical minerals to battery manufacturing, electric vehicles and clean electricity, including hydrogen.
Ottawa has also promised big bucks for health care. It recently signed 10-year funding agreements with provinces on health-care transfers, and that spending is expected to be accounted for in the budget.
And with the cost of living still a top economic issue for many Canadians, the Liberals have signalled the budget will include new affordability measures.
- Biden's visit to Canada: 'Everything is interwoven': Trudeau and Biden vow continued Canada-U.S. collaboration during historic visit
"In the weeks to come, for those Canadians who feel the bite of rising prices the most acutely, for our most vulnerable friends and neighbours, our government will deliver additional, targeted inflation relief," Freeland said in Oshawa, Ont. on Monday.
But Bartlett said the federal government has to balance its big-ticket spending priorities with an uncertain economic outlook.
Many economists are forecasting that Canada could enter a recession this year as high interest rates weigh on the economy. Since March 2022, the Bank of Canada has aggressively raised interest rates to crack down on high inflation.
As global price pressures ease and interest rates dampen spending in the economy, inflation has been slowing. Canada's annual inflation rate has tumbled from 8.1 per cent in the summer to 5.2 per cent in February.
Even as inflation becomes less of a problem, though, a slowing economy means less government revenues to finance spending.
According to a report from Desjardins, new spending measures alone wouldn't necessarily put federal finances on an unsustainable path. But if significant new spending is paired with a worse-than-expected economic downturn, that could spell trouble for the federal government, the report says.
"Planning for an optimistic future and spending accordingly now could lead to very challenging circumstances going forward," Bartlett said.
The federal government also runs the risk of fuelling inflation with excessive spending, making the Bank of Canada's job of cooling inflation more challenging. Freeland has repeatedly said she doesn't plan on doing that, noting the federal government can't compensate all Canadians for the rise in prices.
Bartlett said the federal government so far has done a good job balancing the need to help low-income Canadians while avoiding adding fuel to the fire.
"My concern is this that (if) they continue to layer this on top of additional spending for other other initiatives ... it's not only going to make potentially the Bank of Canada's job more challenging, but it's also going to just increase the size of the deficit at a time when the economic outlook is very uncertain," he said.
There is some ambiguity around how the government will approach tax policy in this year's budget.
Some policy experts have suggested that increasing tax revenues might be part of the solution when it comes to stabilizing federal finances. A shadow budget put together for the C.D. Howe Institute, an economic thinktank, recommended increasing the GST tax rate.
But Bartlett said raising taxes might be a tough sell for Canadians, especially because the federal government has had mixed results on some of its key areas of investment, such as its national housing strategy.
"If we continue to see increased spending, and that requires tax increases to to afford that spending, there's going to be ... increased scrutiny by the public on whether or not we're getting the bang for the buck," Bartlett said.
On the political front, the Liberals also have to contend with New Democrat priorities as outlined in the party's supply-and-confidence agreement with the Liberals. It agreed to support the minority government in key votes until 2025 -- including on federal budgets -- in exchange for movement on shared priorities.
In the upcoming budget, NDP Leader Jagmeet Singh has said he wants to see the government extend the six-month boost to the GST rebate, introduced last fall, which temporarily doubled the amount people received.
Singh has also said he'd like to see federal funding for school lunches.
Per the parties' agreement, the Liberals have already agreed to create a federally funded and administered dental care program this year that would replace the dental benefit for children in low-income families that was rolled out in the fall.
The deal also commits the Liberals to passing legislation on a national pharmacare program by the end of 2023 -- although there's been no sign of movement on that yet.
This report by The Canadian Press was first published March 26, 2023.
IN DEPTH
Budget 2024 prioritizes housing while taxing highest earners, deficit projected at $39.8B
In an effort to level the playing field for young people, in the 2024 federal budget, the government is targeting Canada's highest earners with new taxes in order to help offset billions in new spending to enhance the country's housing supply and social supports.
'One of the greatest': Former prime minister Brian Mulroney commemorated at state funeral
Prominent Canadians, political leaders, and family members remembered former prime minister and Progressive Conservative titan Brian Mulroney as an ambitious and compassionate nation-builder at his state funeral on Saturday.
'Democracy requires constant vigilance' Trudeau testifies at inquiry into foreign election interference in Canada
Prime Minister Justin Trudeau testified Wednesday before the national public inquiry into foreign interference in Canada's electoral processes, following a day of testimony from top cabinet ministers about allegations of meddling in the 2019 and 2021 federal elections. Recap all the prime minister had to say.
As Poilievre sides with Smith on trans restrictions, former Conservative candidate says he's 'playing with fire'
Siding with Alberta Premier Danielle Smith on her proposed restrictions on transgender youth, Conservative Leader Pierre Poilievre confirmed Wednesday that he is against trans and non-binary minors using puberty blockers.
Supports for passengers, farmers, artists: 7 bills from MPs and Senators to watch in 2024
When parliamentarians return to Ottawa in a few weeks to kick off the 2024 sitting, there are a few bills from MPs and senators that will be worth keeping an eye on, from a 'gutted' proposal to offer a carbon tax break to farmers, to an initiative aimed at improving Canada's DNA data bank.
Opinion
opinion Don Martin: Gusher of Liberal spending won't put out the fire in this dumpster
A Hail Mary rehash of the greatest hits from the Trudeau government’s three-week travelling pony-show, the 2024 federal budget takes aim at reversing the party’s popularity plunge in the under-40 set, writes political columnist Don Martin. But will it work before the next election?
opinion Don Martin: The doctor Trudeau dumped has a prescription for better health care
Political columnist Don Martin sat down with former federal health minister Jane Philpott, who's on a crusade to help fix Canada's broken health care system, and who declined to take any shots at the prime minister who dumped her from caucus.
opinion Don Martin: Trudeau's seeking shelter from the housing storm he helped create
While Justin Trudeau's recent housing announcements are generally drawing praise from experts, political columnist Don Martin argues there shouldn’t be any standing ovations for a prime minister who helped caused the problem in the first place.
opinion Don Martin: Poilievre has the field to himself as he races across the country to big crowds
It came to pass on Thursday evening that the confidentially predictable failure of the Official Opposition non-confidence motion went down with 204 Liberal, BQ and NDP nays to 116 Conservative yeas. But forcing Canada into a federal election campaign was never the point.
opinion Don Martin: How a beer break may have doomed the carbon tax hike
When the Liberal government chopped a planned beer excise tax hike to two per cent from 4.5 per cent and froze future increases until after the next election, says political columnist Don Martin, it almost guaranteed a similar carbon tax move in the offing.
CTVNews.ca Top Stories
Former homicide detective explains how police will investigate shooting outside Drake's Bridle Path mansion
Footage from dozens of security cameras in the area of Drake’s Bridle Path mansion could be the key to identifying the suspect responsible for shooting and seriously injuring a security guard outside the rapper’s sprawling home early Tuesday morning, a former Toronto homicide detective says.
Federal government grants B.C.'s request to recriminalize hard drugs in public spaces
The federal government is granting British Columbia's request to recriminalize hard drugs in public spaces, nearly two weeks after the province asked to end its pilot project early over concerns of public drug use.
Stormy Daniels describes meeting Trump during occasionally graphic testimony in hush money trial
Stormy Daniels took the witness stand Tuesday at Donald Trump's hush money trial, describing for jurors a sexual encounter the porn actor says she had with him in 2006 that resulted in her being paid off to keep silent during the presidential race 10 years later.
MPs agree Canadian gov't should improve new disability benefit
The federal government needs to safeguard the incoming Canada Disability Benefit from clawbacks and do more to ensure it actually meets the stated aim of lifting people living with disabilities out of poverty, MPs from all parties agree.
King Charles too busy to see son Prince Harry during U.K. trip
Prince Harry will not be seeing his father King Charles during his current visit to Britain as the monarch will be too busy, Harry's spokesperson said on Tuesday.
Boy Scouts of America changing name for first time in 114 years, aiming for inclusivity
The Boy Scouts of America is changing its name for the first time in its 114-year history and will become Scouting America. It's a significant shift as the organization emerges from bankruptcy following a flood of sexual abuse claims and seeks to focus on inclusion.
opinion Tom Mulcair: Trudeau's handling of Poilievre's 'wacko' House turfing a clear sign of Liberal desperation
When Speaker Greg Fergus tossed out Pierre Poilievre from the House last week, "those of us who have experience as parliamentarians simply couldn't believe our eyes," writes former NDP leader Tom Mulcair in his column for CTVNews.ca
Security guard shot, seriously injured outside of Drake's Toronto mansion
A security guard working at Drake’s Bridle Path mansion in Toronto was seriously injured in a shooting outside the residence early Tuesday morning, police said.
Katy Perry's mom was fooled by AI images of the singer at the Met Gala
Katy Perry did not attend the Met Gala on Monday, but some of the singer’s fans – and even her mom – thought she did.
Local Spotlight
'It looked so legit': Ontario man pays $7,700 for luxury villa found on Booking.com, but the listing was fake
An Ontario man says he paid more than $7,700 for a luxury villa he found on a popular travel website -- but the listing was fake.
Investigating the tale of Winnipeg's long-running mystery bookstore
Whether passionate about Poirot or hungry for Holmes, Winnipeg mystery obsessives have had a local haunt for over 30 years in which to search out their latest page-turners.
'Love has no boundaries': Sask. couple in their 90s and 80s get married
Eighty-two-year-old Susan Neufeldt and 90-year-old Ulrich Richter are no spring chickens, but their love blossomed over the weekend with their wedding at Pine View Manor just outside of Rosthern.
Twin Alberta Ballet dancers retire after 15 years with company
Alberta Ballet's double-bill production of 'Der Wolf' and 'The Rite of Spring' marks not only its final show of the season, but the last production for twin sisters Alexandra and Jennifer Gibson.
Video shows gaggle of geese stopping traffic on Highway 1 near Vancouver
A mother goose and her goslings caused a bit of a traffic jam on a busy stretch of the Trans-Canada Highway near Vancouver Saturday.
B.C. mayor stripped of budget, barred from committees over Indigenous residential schools book
A British Columbia mayor has been censured by city council – stripping him of his travel and lobbying budgets and removing him from city committees – for allegedly distributing a book that questions the history of Indigenous residential schools in Canada.
Three Quebec men from same family father hundreds of children
Three men in Quebec from the same family have fathered more than 600 children.
Here's how one of Sask.'s largest power plants was knocked out for 73 days, and what it took to fix it
A group of SaskPower workers recently received special recognition at the legislature – for their efforts in repairing one of Saskatchewan's largest power plants after it was knocked offline for months following a serious flood last summer.
Quebec police officer anonymously donates kidney, changes schoolteacher's life
A police officer on Montreal's South Shore anonymously donated a kidney that wound up drastically changing the life of a schoolteacher living on dialysis.