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

Penticton fire crews quickly put out a small blaze at a home on Duncan Ave. E Monday night. (Mike Biden photo)
UPDATE: House fire sends one to hospital

The fire at the Duncan Place home was cooking related

(Pixabay)
‘Roadmap out of COVID-19’: Innovate BC’s program helping businesses recover

CEO Raghwa Gopal said the tech sector is here to help brick and mortar businesses

For the second time in five years, John Pankiw has donated $100,000 to Penticton Regional Hospital.  (Submitted - Stuart Bish Photography)
Penticton Regional Hospital donation honours front-line workers

John Pankiw donated $100,000 for the second time in five years

Toronto Public Health nurse Lalaine Agarin makes preparations at Toronto’s mass vaccination clinic, Jan. 17, 2021. THE CANADIAN PRESS/Frank Gunn
3 deaths, 234 new cases of COVID-19 in Interior Health over the weekend

One death connected to outbreak at Kamloops’ Royal Inland Hospital, where 20 patients and 28 staff have tested positive

Rolling seven-day average of cases by B.C. health authority to Jan. 21. Fraser Health in purple, Vancouver Coastal red, Interior Health orange, Northern Health green and Vancouver Island blue. (B.C. Centre for Disease Control)
2nd COVID vaccine doses on hold as B.C. delivery delayed again

New COVID-19 cases slowing in Fraser Health region

A large portion of Anglemont is without running water due to a water main break on Jan. 26. (CSRD Image)
A large part of Anglemont in the North Shuswap is without water due to a water line break on Jan. 26. (Black Press File Photo)
Broken water main leaves Shuswap community without running water

The water line has left Anglemont residents either without water or with low pressure.

A woman wearing a protective face mask to curb the spread of COVID-19 walks past a mural in Victoria, B.C., on Monday, Dec. 7, 2020. THE CANADIAN PRESS/Marissa Tiel
Five big lessons experts say Canada should learn from COVID-19:

‘What should be done to reduce the harms the next time a virus arises?’ Disease control experts answer

A Vancouver Police Department patch is seen on an officer’s uniform as she makes a phone call. THE CANADIAN PRESS/Darryl Dyck
Vancouver man calls 911 to report his own stabbing, leading to arrest: police

Officers located the suspect a few blocks away. He was holding a bloody knife.

Kelowna seen from the top of Knox Mountain. (Phil McLachlan - Capital News file)
Homeownership unattainable for many Kelowna residents

Single-person and single-parent households often have limited options when it comes to housing

A Kelowna cannabis manufacturer has acquired another cannabis-based firm. (Black Press Media File)
Kelowna cannabis company acquires edibles manufacturer for $24.9 million

The Valens Company has acquired LYF Food Technologies

Vernon has agreed to a goose cull to control the over-populated invasive species making a muck of area parks and beaches. (Morning Star file photo)
Okanagan city pulls the trigger on goose cull

City asking neighbours to also help control over-population of geese

LaRae Richards loads an order for deliver via Uber Eats Wednesday afternoon at Red Onion Burgers in Mountlake Terrace on May 17, 2017. (Kevin Clark / The Herald)
Uber Eats comes to Kelowna

There are more than 60 businesses on the online delivery platform

Most Read