Mr. Speaker, colleagues in the House and Canadians, I have the honour to table, in both official languages, the economic and fiscal update 2021.
Twenty-one months ago, a global pandemic reached our shores. Few of us had any idea how long it would last or the toll it would take and, today, we are facing omicron, an even more virulent variant of this virus. However, we can be confident we will get through this, because our government did understand from the very outset that to save lives our economy would have to be locked down, so we put in place unprecedented measures to meet this unprecedented challenge.
We supported municipalities and we supported provinces and territories. We supported our health care system and we supported schools. We provided free vaccines, PPE, rapid tests and therapeutic medicines.
Our focus was on people and jobs. We helped millions of Canadians with income supports. We delivered direct payments to seniors and families.
We kept businesses going, particularly small businesses, and helped workers stay connected to their jobs, with the wage and rent subsidies and loans for small businesses. We did this because it was the right thing to do. We also did it because we knew it was an investment in our economy that would pay off.
Our goal was to prevent economic scarring. We wanted to emerge from this with our economic muscle intact, ready, as a country, to come roaring back. Keeping the Canadian economy on life support as we went into COVID-19 hibernation was expensive, but we knew that keeping Canadian families and businesses solvent would help our economy rebound.
This economic and fiscal update provides Canadians with a transparent report of our nation's finances. It also includes targeted investments that will ensure we have the weapons we need to finish the fight against COVID-19, an effort more urgent now than ever with the surge of omicron.
First, we are protecting children with pediatric vaccines, now available for free for all children five and over. Booster shots are free for all Canadians too, just as first and second doses have been.
Omicron makes boosters more urgently important now than ever. I ask people to please go and get a booster as soon as they are eligible. I have booked mine and I am very glad to have done so. We have enough boosters for everyone, and boosters are an essential defence against the mounting threat of omicron.
We are investing in new antiviral drugs for COVID-19 patients that prevent hospitalizations and will save lives. We are investing in ventilation improvements to prevent outbreaks at schools and workplaces.
To date, our government has delivered nearly 80 million rapid tests to provinces, territories and indigenous communities, free of charge. This fiscal update sets aside a further $1.7 billion, enough to procure more than 180 million additional rapid tests. Rapid tests are a useful tool in the intensifying fight against omicron. We are buying and distributing them, and we encourage Canadians to use them. We are also providing support to provinces and territories for proof of vaccination credentials. As we brace ourselves for the rising wave of omicron, we know that no one wants to endure new lockdowns. That is why vaccines, vaccine mandates, boosters, ventilation and rapid tests are so essential.
Over the past 21 months we have all learned that fast, local action to limit outbreaks is much less costly than waiting and being forced to impose wider and deeper restrictions. In that knowledge, and out of an abundance of caution, we are proposing local lockdown support for workers and businesses. These measures are an insurance policy for our country, and are in place to help local public health officials make the right decisions in the coming months, knowing their communities will have the support they need. We are also moving forward on 10 days of paid sick leave for workers in federally regulated businesses.
We are also provisioning an additional $4.5 billion to pay for possible further costs of fighting omicron and other COVID‑19 surges, including spending on border measures and on income and business supports.
The COVID pandemic triggered the steepest economic contraction in Canada since the Great Depression. At its worst, it cost three million Canadians their jobs, as our GDP shrank by 17%. This was a once-in-a-generation trauma. When it first hit, many predicted it would take years to rebuild. That is why we are so pleased to report that Canada has largely recovered from the economic damage inflicted by COVID‑19 and is poised for robust growth in the months to come. We have now surpassed our target of creating a million jobs. In fact, we have recovered 106% of the jobs lost at the peak of the pandemic, significantly outpacing the United States, where just 83% of lost jobs have been recovered so far.
From the start, we have understood that few things are more central to the economic well-being of Canadians than having a job. That is why our investments have been so singularly focused on employment and why Canada has experienced the second-fastest recovery of lost jobs in the G7.
Our GDP has already returned to near pre-pandemic levels. Our GDP growth of 5.4% in the third quarter outpaced that of the U.S., the U.K., Japan and Australia. OECD projections suggest that by 2023, Canada's recovery will be the second fastest in the G7.
This update shows that the size of the Canadian economy this year will be $2.48 trillion. When we published our economic forecast in the 2018 budget, that is almost exactly the size we expected our economy to grow to by this year, and we made that forecast when none of us had any idea that our economic growth and our lives would be so deeply disrupted by COVID‑19. We are back on track and that is good news for all Canadians.
Canada posted a $25.1-billion surplus in our trading goods in October as our exports rose. Fewer businesses went bankrupt over the past year than in 2019, before the pandemic. There are now an additional 6,000 active businesses in Canada compared with before the pandemic. Household employment income is now 7% above its precrisis level, and Canadians have used this difficult time to pay down their personal debt relative to their income.
Our recovery from the COVID‑19 recession has significantly surpassed Canada's recovery from the 2008 recession. We have already more than recovered lost jobs, a healing that took eight months longer after the much milder 2008 recession. We are on track to recover lost GDP five months more quickly than after the 2008 contraction.
Provincial government balance sheets were sheltered from the pandemic thanks to strong support from the federal government. Provincial and territorial government revenues actually increased in 2020-21 because of substantial federal support, both through direct transfers and through Canada's COVID-19 economic response.
This assistance helped put a floor under provincial and territorial government revenues thereby limiting their deficits and debt. Fully $8 out of every $10 provided to fight COVID-19 and support Canadians through the pandemic came from the federal government. Our government will continue to be agile as we navigate the highly volatile and evolving global economy and health industry.
We need to continue to manage the spread of this sneaky and unpredictable virus. The pain of the families who lost a loved one can never be measured. Our guiding principle will continue to be the conviction that the best economic policy is a strong health policy. Because we have been steadfast in putting saving lives first, this is the approach that has driven our strong economic performance and the second-lowest mortality rate in the G7.
As we look ahead, we are mindful of elevated inflation and its impact on the cost of living for Canadians. We know inflation is a global phenomenon driven by the unprecedented challenge of reopening the world’s economy. Turning the world economy back on is a good deal more complicated than turning it off.
During the lockdown, Canadians' incomes remained strong, on average, but opportunities to spend on services were severely restricted. The result was that Canadians spent more on durable goods, without spending on meals in restaurants, personal care or vacations. Canadians spent their disposable income on renovations, new furniture, appliances and cars. It will take some time for supply chains to catch up and for our economy to rebalance itself.
To help unsnarl Canada's supply chains, today we are announcing $50 million to launch a call for proposals that will help Canadian ports acquire cargo storage capacity and take other measures to relieve supply chain congestion.
Our government understands that a strong monetary policy framework is the best weapon in our arsenal to keep prices stable so that Canadians can afford the cost of living. That is why yesterday we renewed the Bank of Canada's 2% inflation target to ensure that the current rate of inflation does not become entrenched.
Canada was a pioneer when we established an inflation target to guide our central bank in setting interest rates. In the 30 years since, the Bank of Canada has successfully maintained price stability in our country. Our government has every confidence the bank will continue to deliver on this essential mandate. Canadians should be wholly confident in their central bank.
Many Canadians worry about paying their bills. That is why we are glad we indexed the Canada child benefit to inflation, and are committed to continuing to index old age security, the guaranteed income supplement, the goods and services tax credit, and other benefits for the most vulnerable.
We are committing today to provide guaranteed income supplement or allowance beneficiaries who also received the Canada emergency response benefit with a one-time payment to alleviate the financial hardship they may have faced as a result of an unintended interaction between the two benefits. We are also laying out a plan to provide debt relief to students who need to repay the Canada emergency response benefits they were not eligible for by proposing to offset their debt with the Canada emergency student benefit amount for which they were eligible.
We are establishing the $60‑million Canada performing arts workers resilience fund, which will support initiatives that improve the economic, career, and working conditions of live performance arts workers, including independent contractors.
Early learning and child care costs are like a second mortgage for many young Canadian families. Child care that is too expensive or just not available keeps many mothers from going back to work, which is an unacceptable brake on our economy at a time when we are facing labour force shortages.
We knew that high-quality, $10-a-day child care would make life more affordable for Canadian families and drive economic growth. That is why our $30-billion investment in early learning and child care was the cornerstone of the April budget.
Our plan was widely supported, but many Canadians were skeptical about our ability to get the job done. I understood them. After all, Canadian women have been trying to establish a national system of early learning and child care for more than half a century and, with the exception of Quebec, we had not succeeded.
Today, I have great news for Canada's working mothers and fathers. Less than eight months after we announced our bold project in our budget, we now have child care deals with nine provinces and one territory. Within five years, Canadians will proudly rely on $10-a-day child care just as our universal, publicly accessible health care system has come to define us as a society. This is a historic accomplishment that will transform the lives of every parent in Canada and of every future parent in Canada for generations to come.
Let us give this effort a final push and conclude agreements with Ontario, the Northwest Territories and Nunavut. We can and we must get this done now.
Immigration is another important driver of economic growth and is a Canadian competitive advantage. Our government is committed to bringing in 411,000 immigrants in 2022. It will be the highest number in Canadian history. To help support this effort and reduce processing time for permanent- and temporary-resident and Canadian citizenship applications, we are investing $85 million in our immigration system.
Housing prices are a real concern, especially for middle-class Canadians hoping to buy their first homes. Housing affordability remains a priority for our government, and we will take further action in the upcoming budget. As we announced in the spring budget on January 1, 2022, our government will apply Canada's first national tax on vacant property owned by non-resident non-Canadians.
As we said we would, the government is also bringing forward legislation to extend the northern residents deduction so Canadians in the north can claim up to $1,200 in eligible travel expenses on their taxes starting next month. The government will also bring forward legislation to extend small businesses' deadline for the repayment of Canada Emergency Business Account loans, and to ensure that seasonal workers who received pandemic benefits can still qualify for the EI seasonal workers pilot project.
Climate change is causing increased volatility in the economy. Recent and tragic floods in British Columbia devastated homes, farms, and critical infrastructure, and further disrupted supply chains. Severe droughts, including across our Prairies, have contributed to increases in food prices. We are taking action to fight climate change.
Canada has a world-leading price on pollution that is helping to lower emissions and grow a cleaner economy. In fact, as many countries in the world look to up their level of ambition they are seeing inspiration in our plan. We are also working to finalize Canada’s first National Adaptation Strategy by the end of next year. The green transition of the global economy is under way. It is one of the great economic opportunities, and one of the great challenges, before us.
Our government is determined that Canadians must emerge from this international transformation even more prosperous than we are today. We will ensure that there are good sustainable jobs for Canadians in every corner of the country, for decades to come.
Above all, we know that our national focus, once we emerge from COVID-19, must be growth and competitiveness. Measures to promote them will figure prominently in the budget. Our government understood from the start of this pandemic that the best way to maintain strong public finances was to keep our economy strong. That is what our emergency spending achieved. This fall, Moody's and S&P both reaffirmed Canada's AAA credit rating.
We know that Canadians work hard to earn a living, and expect us to be careful with their money. We know we have a duty to do the right thing for today and for tomorrow. We understand that our debts must be repaid. We came into this crisis with the lowest net debt-to-GDP ratio in the G7, and in fact we have increased our relative advantage during the pandemic.
We remain committed to the fiscal anchors that we outlined in the spring budget: to reduce the federal debt-to-GDP ratio over the medium term and to unwind COVID-19-related deficits. In October, we pivoted from necessary but costly broad-based support programs to more narrowly targeted, less expensive measures, as we had promised we would. Our government will continue to be a responsible and prudent fiscal manager.
This update reports a deficit of $327.7 billion for the last fiscal year and of $144.5 billion for this fiscal year. This compares favourably with our forecast of $354.2 billion and $154.7 billion, respectively, in the April budget.
Our debt-to-GDP ratio in the last fiscal year was 47.5%. It will peak at 48% in this fiscal year and then fall steadily, as will the deficit. This contrasts positively with our prediction in the April budget.
In budget 2021, we forecast that in this fiscal year, 42% of our bond issuance would be long-term debt of 10 years or more. Today, we can forecast that it will be 45%. Members will recall that in 2019, only 15% of our debt was locked in over a long-term horizon. Pushing more of our debt into bonds with a longer maturity ensures that Canada's debt servicing costs are sustainable.
Thanks to an improving fiscal outlook, the amount of money we will need to issue and borrow into this year is $35 billion lower than forecast in budget 2021. Despite a necessary and unprecedented level of spending to support Canadians during COVID-19, our public debt charges as a share of GDP will be the same this year and next year as they were in 2018 and 2019, before the pandemic.
This fiscal update includes a provision to settle the cases on harm to first nations children currently before the Canadian Human Rights Tribunal and to invest in transforming the services offered to first nations children and their families. We have provisioned $20 billion for compensation and $20 billion to improve the system going forward.
The Government of Canada is working toward an agreement with the parties on this issue. We know that paying our historic debt to indigenous people is paramount, and that we must act to ensure that these injustices do not happen again. We will not and we cannot evade this essential commitment. That is why we are today setting aside the funds to pay for it.
It has been a hard 21 months, but we are succeeding because we are doing what Canadians do in a crisis. We are helping each other, we are working together and we are doing what needs to be done, whether it is as big as the wage subsidies or as small as wearing a mask at the grocery store.
With winter upon us and omicron now among us, we know that there will still be tempests ahead, but we are resilient. Our plan is working and once we finish the fight against COVID-19, we will turn our resolve toward fighting climate change, advancing reconciliation with indigenous people and building an economy that is stronger, fairer, more competitive and more prosperous for all Canadians.
Mr. Speaker, the has proven her government has no economic plan for our country. That is how I started my response to last year's economic update and, unfortunately, the exact same thing rings true today.
Today, the Liberal government shared a snapshot of Canada's economic position. The is actually hoping to fool Canadians into thinking everything is fine. After shutting down an economy for over a year and spending half a trillion dollars, of course one will see some growth and some employment gains. What the minister neglected to point out is how the government's mismanagement has led our country and Canadian families to the edge of an economic cliff. Inflation, in fact, is helping to fudge the Liberal numbers while hurting families and seniors across this great country. “Just inflation” is good for the 's budget but bad for Canadians' budget.
Canadians are living through a cost of living crisis. We hear that all across the country people are living through an inflation crisis that the predicted a year ago would be deflation; she was wrong on all the fundamental projections upon which the cost of living is based.
Canadians, new families and seniors are struggling with a housing crisis across the country, and the Liberal government is now focused on making life more expensive for Canadians. It plans to tax the sale of homes, including colleagues' homes. On January 1, 2022, it is going to start raising taxes. While the Liberals have no plan for our recovery, they certainly have a high-tax, high-debt agenda, and that is the last thing Canadians can afford right now.
During my response to the Speech from the Throne last month, I spoke about Peter from Nova Scotia, who owns a boat charter and lobster eatery in Peggy's Cove. Small businesses like his are struggling with rising costs. They are struggling to make ends meet, and they are going to be struggling to pay the government's new payroll tax.
I spoke about Clifford from rural Alberta, who felt completely left behind by the Liberal government. Clifford is a senior on a fixed income and he is struggling with rising prices. Gas is up; food is up; home heating is up. Everything is going up except his benefits.
Do the and the Liberal know about the real struggles these Canadians are facing? Are they listening? Sadly, Canadians like Peter and Clifford, like millions of Canadians across this country, are being left behind by a government that is continually out of touch. That is why the Conservative opposition will be here to be a voice for the millions of Canadians being left behind in the Liberal economy.
Canadians are under increasing pressure. Their paycheques are not keeping pace with the rising cost of living. Average salaries are increasing by about 2%, while inflation is increasing by almost 5%. This means that the average family has had a 3% drop in salary this year alone.
Canadians are getting priced out of their own lives. Merry Christmas from the Liberal government.
To cope with rising home prices and stagnant wages, Canadians have been piling on more and more personal debt in recent years. Now many Canadian families have their finances close to a breaking point. Is the government listening? Twenty-seven per cent of Canadians say they are insolvent and cannot pay all monthly bills and debt payments as costs are going up. Half of Canadians say they are $200 or less away from financial insolvency each month. Canadian household budgets are fragile. When we see increases of 20% to 30% for gas, fuel, rent or food, that crisis is out of control. Thirty-five per cent of Canadians are concerned that future interest rate increases could drive them toward financial bankruptcy.
The Bank of Canada recently said that interest rates will go up next year. Some experts expect rates to be increased five times or more next year. In The Globe and Mail, the head of C.D. Howe had a column that warned about this, called “Brace for impact: Rate hikes are coming”. He said, “Investors, homeowners, businesses, and our big-borrowing governments need to get ready,” as interest rate increases are coming. This is at a time when the government is starting the new year by raising taxes on Canadians on January 1. Happy new year.
This is why inflation matters. This is why monetary policy matters. This is why the budget, job creation, our competitiveness, trade with the United States and our economic future matter. By 2023, the will have doubled the national debt, spending more than all previous prime ministers combined. That is astounding, and there is hardly even a notice from a Prime Minister who thinks that budgets balance themselves and might think that Canadians' credit card bills do the same. That is not the case.
We have a government coming out of COVID that spent more per capita than all our allies and has some of the worst results. In today's fall economic statement, cleverly snuck in just before the Christmas break, the bragged about how Canada's deficit numbers are better than expected, so let us take a look at that. We know the Minister of Finance has already been flagged for a misleading video on Twitter. Maybe we should look at the numbers behind her claim.
Inflation is boosting the Liberals' tax revenues. If they raise the general price level by almost 5%, that boosts GST revenues by 5%. Our deficit numbers are smaller because their inflation is higher. When the shadow minister for finance asked a simple question of the Minister of Finance on this issue, namely how much more revenue the government has collected from driving up inflation, she would not answer the question. Canadians are paying the price. Inflation may look good to pad the Liberals' budget, but it makes it impossible for Canadians to meet their budgets.
Inflation is rising by almost 5%, the highest in 18 years, and the Bank of Canada is warning that it will get even higher in the months ahead and stay that way through parts of next year. For families with tight budgets and seniors on a fixed income, these are alarming numbers. Our country is drowning in the rising waters of debt that is being fuelled by inflation and by ideological policies that are driving away investment and making Canada one of the last places people will come for their economic recovery. Now we are watching the consequences of the government's decisions in real time.
Heating our homes as we head into the Christmas holiday will be more expensive, with natural gas prices up nearly 20%. Filling up a car to go visit grandparents on Christmas Eve will be too, with gas up almost 42%. Even the cost of that big breakfast on Christmas morning will be higher, as eggs are up 7.4%, juice is up 5%, jam is up 8% and bacon is up 20%. We are almost losing our appetite with the rising inflation.
However, the Liberals' lack of action on competitiveness and supporting Canadian workers is the real canary in the coal mine for our economy.
Canada is bleeding capital investment. More investment and production are going to the United States and overseas. This means that we are becoming even more dependent on foreign countries and on foreign supply chains that are not choosing to get supply to Canada but to themselves.
This is a government whose only record achievement beyond debt is record failure in negotiations with the United States. It has failed energy workers, it has failed forestry workers, it has failed farming families, it has failed auto workers and, with buy American, it is failing every supply chain in manufacturing, including steel and aluminum, across this great country. It is failing millions of Canadians. It is no wonder President Biden said that Canada under this is his “easiest” relationship. It is easy for the U.S. to win under this government.
Businesses are grappling with a dire labour shortage. Everyone can see it, except the Liberals.
My question is for the . Does he have a plan and concrete solutions that will solve the labour shortage crisis?
As always, the Prime Minister refuses to listen. It is time for the Liberal government to tackle the labour shortage affecting Quebec and all of Canada. That is why he must make it easier for immigrant workers to enter Canada, invest in specialized training programs and encourage people to embrace the trades. He must also offer incentives to employers and employees, as this will encourage people to return to work.
Time is running out. Business owners are out of patience, and so are we.
Business investment declined by an average of 1% every year from 2016 to 2019, reaching a 25-year low as a percentage of GDP, and that was just before the pandemic. Canadian factories are operating with the lowest levels of capital investment in 35 years, which will lead to lower productivity, fewer jobs and lower wages. Businesses across Canada, but particularly in southern Ontario, are investing and creating jobs, but Michigan, Pennsylvania and Ohio are moving to a more competitive, less burdensome regulatory environment where they do not see payroll taxes going up the first of the new year and where they see incentive and opportunity as opposed to being held back by ideology.
The saddest part is that we are losing an opportunity to build the future economy. Canada should be booming, firing on all cylinders, investing in new technologies, innovating and providing upward pressure on wages because of growth. We can get back to building prosperity and great jobs for Canadians, but the Liberal government, it is clear, has no plan to make that a reality.
The Conservatives believe in a Canada where everyone has the chance to work hard, everyone has the chance to own a home and everyone has a chance to build this country up and give it to their children for a successful future. However, half of Canadians under 30 are giving up on owning a home. That is a failure of leadership of epic proportions. Nationwide, the average price of a home has jumped by $54,000 in just the last few months, up 30% and worse. According to RE/MAX last week, real estate prices are expected to surge another 9.2% next year.
Do we really want to be the country where young people, a generation of them, are giving up on the idea of owning a home? Do we really want to be increasingly a nation of part-time and contract jobs, and no long-term jobs with growth potential for all Canadians? The government is giving up on the next generation of Canadians.
For those who already own a home, the Liberals are going to tax the sale of it. They are slowly coming after Canadians' home equity under the guise of a solution to the housing crisis they have presided over in the last five to six years.
This tax targets hard-working Canadians who want to use the sale of their homes to fund their retirement. Simply put, this tax deprives them of their hard-earned savings.
The government's solutions will only make the housing crisis worse and will attack people as they approach retirement. The Conservatives have pressed for concrete actions to address our housing crisis, build more homes and return the dream of home ownership to millions of Canadians. Unlike the Liberal government, we are not giving up on Canadians under 30.
What we see in another hollow economic statement released on the eve of a Christmas break is empty promises, massive debt, higher taxes and no real economic plan. The is not telling Canadians the real story. Inflation is hurting Canadian families but helping Liberal finances.
The Conservatives will continue to be a voice for the millions of Canadians being left behind by the Liberal government. We are going to fight to build more housing, tackle the cost-of-living crisis and hold the Liberal government to account for giving up on the next generation. We are going to build a plan to restore Canadian prosperity and make Canada an economic powerhouse.
Right now, Canada should be focused on proposing solutions to lift up Canadian families with great jobs and rising wages. We need to build a dynamic economy that benefits people in all sectors of our economy and in all regions of the country. From the resources in the ground to the ideas in our heads, we need Canada to build, discover and strive. We need a generation of Canadians who want to win, not settle for second, third or 10th best.
It is time to simplify the tax system and cut red tape. It is time to make Canada the best place in the world to invest, create, develop, build and start a business.
We will make Canada a country with the most innovative economy in the world, a country with ultra-competitive tax rates, a country with incentives for innovation and an advanced research agency focused on the private sector and the economy of the future.
Let us provide financing and investment capital to small businesses so they can flourish. Let us build world-class infrastructure all across this great country, not fund more bureaucratic programs. Let us also be proud of our resource sector and the millions of direct and indirect jobs from it. It is the only thing really driving our current account balance, and the and his ideological ministers want to end it. Our energy is the most ethical, our critical minerals are the most accessible and our commitment to emission reduction and indigenous participation is the most reliable in the world.
It is time for a new approach, not more empty words and failed promises. It is time to create a dynamic and more prosperous Canada, one that grows, that strives, that wins. It is time to stop being happy with last place. It is time to stop being happy with record debt, higher taxes and more government intervention.
Canada's Conservatives are here to build. We are here to hold up. We are here to win. We are here to fight for our children's future.