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 historic Leir House building run by the Penticton and District Art Council was vandalized, with glass smashed and graffiti placed on the porch and wall. (Facebook)
Penticton Arts Council looking for help after Leir House vandalized

Glass was smashed and graffiti placed on the historic building

The regional district’s Penticton offices. (John Arendt - Summerland Review)
Building and bylaw service up in 2020 for RDOS

More complaints were resolved and building permits issued in 2020 than 2019

The next Canadian census will be held in May, 2021. The Regional District of Okanagan-Similkameen is urging its residents to complete the census form online. (Statistics Canada)
Regional District of Okanagan-Similkameen urges participation in census

National census will be held in May, 2021 with COVID-19 protocols in place

Medical chief of staff Dr. Brad Raison of Penticton Regional Hospital and John Moorhouse of the Okanagan Similkameen Medical Foundation look over one of the rooms in the David E. Kampe Tower in 2017 while the tower was under construction. (Western News File)
After 46 years in media, Moorhouse retires

John Moorhouse spent the last six years with the South Okanagan Similkameen Medical Foundation

The BC SPCA is adapting its fundraising after cancelling events due to COVID-19 restrictions. (Twila Amato - Black Press Media)
BC SPCA gets creative with fundraising as pandemic continues

The non-profit’s in-person fundraising events all had to be cancelled due to COVID-19 restrictions

Grounded WestJet Boeing 737 Max aircraft are shown at the airline’s facilities in Calgary, Alta., Tuesday, May 7, 2019. WestJet will operate the first commercial Boeing 737 Max flight in Canada today since the aircraft was grounded in 2019 following two deadly crashes. THE CANADIAN PRESS/Jeff McIntosh
Passengers unfazed as WestJet returns Boeing 737 Max to service on Vancouver flight

After a lengthy review process, Transport Canada cleared the plane to return to Canadian airspace

A Vernon man’s faith in humanity has been restored since his lost wallet was returned, credit cards, cash and all, to the RCMP station. (Contributed)
Good Samaritan turns in cash-filled wallet to Vernon Mounties

Owner’s faith in humanity restored following a tough few weeks

The top part of the fossil burrow, seen from the side, with feathery lines from the disturbance of the soil – thought to be caused by the worm pulling prey into the burrow. (Paleoenvironntal Sediment Laboratory/National Taiwan University)
PHOTOS: SFU researchers find evidence of ‘giant’ predatory worms on ocean floor

Fossils found the prove the existence of an ancient Taiwanese worm as long as two metres

A woman wearing a face mask to help curb the spread of COVID-19 is seen through Christmas lights, in downtown Vancouver, on Sunday, November 22, 2020. (THE CANADIAN PRESS/Darryl Dyck)
South Okanagan COVID-19 numbers continue downward trend

Oliver and Osoyoos saw the most significant drop in cases Jan. 10 to 16

A dirty white Dodge Ram similiar to this one was reportedly stolen and then involved in a hit and run on Highway 97 in Lake Country Jan. 16. (Contributed)
Stolen truck that rammed car in Lake Country sought

Man in his 30s seen driving white Dodge Ram

Thirty-four unionized workers represented by MoveUp started rotating job action at VantageOne Credit Union's two Vernon locations Monday, Dec. 14, 2020. Workers are calling for basic job protection and fair security. (Jennifer Smith - Vernon Morning Star)
VantageOne workers back on the job following strike

Mediation continues as union and employer work on reaching an agreement

The Salmon Arm health area saw 36 new COVID-19 cases reported between Jan. 10 and 16. (BCCDC Image)
January COVID case numbers in Salmon Arm area already exceed 2020 total

Live data suggests Salmon Arm area saw 53 reported COVID-19 cases between Jan. 3 and 16.

Most Read