The “Walking While Chewing Gum” Statement

March 25, 2024

This afternoon Finance Minister Chrystia Freeland rose before the House of Commons to deliver her Fall economic statement, and with it brought a message that was markedly different in tone and focus than the budget she tabled just last spring. With continued high inflation, the rise of interest rates from the Bank of Canada to try to combat it, international pressures helping to drive those higher costs and the uncertainty abroad that has no immediate end in sight, Minister Freeland faced a worsening fiscal environment that clearly influenced today’s announcement.

While the past few years in Canada have been marked by higher investments by government, today’s statement marked a clear end to those days. While there is some new spending that responds directly to measures undertaken by the United States in President Biden’s “Inflation Reduction Act,” this was a statement that hued more towards restraint. The fact that the statement openly spoke about a coming recession points to that change in tone, and in priorities for the government.

The statement promised $30.6 billion in new spending over the next six years, helping low-income Canadians, students and seniors get through this tough economic period, while also make investments in a green economy and robot industrial policy. Some of these promises include:

  • Refundable tax credit equal to 30 %of the capital cost of investments in clean energy technology (including solar, small modular nuclear reactors, wind and hydro and wave and tidal power projects.)
  • Permanently eliminate interest on federal student and apprentice loans
  • Consult with credit card companies and small businesses with the intention of lowering and regulating credit card transaction fees
  • Doubling the first-time home buyers’ tax credit to $10,000
  • Implement a 2% tax on share buybacks by public corporations in Canada
  • Launch the "Canada Growth Fund" (a arms-length, public investment vehicle, to be capitalized with $15 billion over the next 5 years) by the end of 2022.

The statement projects the federal deficit at $36.4 billion in 2022-23, down from the $52.8 billion forecast back in April, while also showing a path to budget balance by 2027-28.

The big takeaway from this statement is that we are no longer in the freer-spending days of the response to COVID-19. Despite that, this statement also shows that the taps will remain somewhat open towards fulfilling the priorities of the Liberal government and their partners in the “Supply and Confidence Agreement,” the NDP. The focus is clearly on helping those in the greatest need weather the difficult inflationary time that we are living through, but that does not mean that other large, shared priorities will be put aside or ignored. This was very much a “walking while chewing gum” statement, which appears to be setting the table for a more difficult budget in Spring, 2023, while still delivering help for Canadians of all generations.