Budget 2022: the feds foresee a growth with 31,000 million dollars in new expenses | The Canadian News

Federal Liberals have more than $85 billion in new spending thanks to a booming economic rebound and plan to spend some of the windfall on a series of measures aimed at maintaining good growth.

The 2022 budget released Thursday includes more than $31 billion in new spending over the next five years.

Its goal is to speed the flow of goods through the country’s supply chains, boost housing supply and lift businesses out of an anemic investment period.

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The new spending has increased the fiscal year deficit to $52.8 billion from previous estimates of $44.1 billion.

Government officials framed the spending as a hedge against short-term economic uncertainty created by Russia’s unprovoked invasion of Ukraine and the sixth wave of the COVID-19 pandemic.

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But the Liberals also say the spending is aimed at the long term to address structural problems within the national economy that could hold back long-term growth.

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That is why the government is reconfiguring $15 billion in existing spending for a new fund designed to de-risk commercial investment for research and new technology, $3.8 billion over eight years for a critical minerals strategy, and $450 million over five years. to unclog supply chains.

The document also commits to spending money from previous budgets by forcing provinces to allocate nearly $7.3 billion in outstanding infrastructure dollars by next March or risk losing the money. The deadlines for spending the money have also been pushed back from 2027 to 2033.

Overall, the budget points to a government that admits there are obstacles to Canada’s long-term growth prospects, while stopping short of a detailed economic strategy, said Robert Asselin, senior vice president for policy at the Business Council of Canada.

The budget forecasts economic growth of 3.9 percent this year, but expects it to slow over the next four years to an average annual growth of 2.9 percent in real gross domestic product. Inflation is also expected to fall from 3.9 percent this year, an upward revision from December’s fiscal update, before starting next year to fall towards the Bank of Canada’s target of two percent.

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Unemployment is expected to remain at a low of 5.5 percent over the forecast horizon.

Economist Armine Yalnizyan, an Atkinson fellow on the future of workers, said the budget was a missed opportunity to invest in health workers _ for example, to keep workers from leaving the care economy that accounts for a fifth of GDP, and that other workers trust.

Total spending this fiscal year will drop to $452.3 billion, including debt service costs, from $497.9 billion in the previous 12-month period when emergency relief measures end for the pandemic.

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Even with emergency spending, the budget forecasts that debt as a percentage of the economy will reach 45.1 percent this year and decline in coming years, even in the worst case scenario forecast in the document.

Randall Bartlett, senior director of Canadian economics at Desjardins, said the government has put some of its financial windfall in the bank for a rainy day given the uncertain environment, and has refrained from going ahead with a handful of election promises this budget.

To pay for some of the new spending, the government is implementing a tax on excess profits on banks and insurance companies that the Finance Department expects will raise $6.1 billion over five years. There is also a warning shot to the country’s top earners that the government plans to change its minimum tax in detail later this year.

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The Liberals also promise a spending review to find $6 billion in savings over five years. A progress report is promised for next year’s budget.

© 2022 The Canadian Press


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