Deputy Prime Minister and Minister of Finance Chrystia Freeland responds to a question during a weekly news conference, Tuesday, February 27, 2024 in Ottawa.Adrian Wyld/The Canadian Press
Finance Minister Chrystia Freeland will present the next budget in the House of Commons on April 16, with the government facing considerable political pressure over the economy.
Ms. Freeland said Monday that the economic plan will be about “building more homes, faster, making life more affordable and creating more good jobs.”
The budget will be released at a time of high interest rates and as Conservative Leader Pierre Poilievre focuses on attacking Prime Minister Justin Trudeau over housing affordability and cost-of-living issues.
It is also happening later than usual. Traditionally, federal budgets are tabled by late March; it is uncommon for the fiscal blueprint to be released in April.
Last week, Ms. Freeland signalled that the budget will keep this year’s deficit below $40.1-billion, as the government faces competing pressures to spend more and exercise restraint to avoid fuelling inflation.
“We laid out a clear set of fiscal guideposts in the fall economic statement and we will meet those guideposts,” Ms. Freeland said.
The fall economic statement had three specific targets: keep the deficit below $40.1-billion; lower the debt-to-GDP ratio in 2024-25 and keep it on a declining track; and keep annual deficits below 1 per cent of GDP from 2026-27 and beyond.
Ms. Freeland said housing, affordability and economic growth were themes that emerged in prebudget consultations.
“I would say that the issues that I am hearing about the most, that are front of mind to me, are housing, housing, housing,” she said.
The Business Council of Canada (BCC) said Monday that with GDP per capita declining for a sixth straight quarter and with the global economy facing a precarious year ahead, the federal budget must cultivate conditions for economic growth.
“The government has an opportunity to implement growth policies, including many of its own previous commitments, without putting an unfair financial burden on future generations,” said BCC president and chief executive officer Goldy Hyder.
The BCC said the government should avoid introducing net new spending if it hopes to help ease prices and lower interest rates for Canadians.
Surging inflation over the past few years has stretched affordability for Canadians. While the annual rate of inflation has fallen from a high of 8.1 per cent in June, 2022, to 2.9 per cent this January – within the Bank of Canada’s target range of 1 per cent to 3 per cent – housing costs and food prices continue to rise quickly. Additionally, interest rates implemented by the central bank to control inflation are pushing up mortgage payments for homeowners.
The Bank of Canada, which sets monetary policy independently from the federal government, has held interest rates steady since last summer.
Late last month, Mr. Trudeau said the government was optimistic the bank will start bringing rates down some time this year, hopefully sooner rather than later.
Ahead of the release of the budget, Ms. Freeland is facing calls to increase federal spending. For example, Canada’s big city mayors recently expressed concerns that the budget may not deliver on promised renewals of long-term infrastructure programs, many of which are expiring or will soon expire.
Internationally, NATO Secretary-General Jens Stoltenberg has urged Canada to set a date by which it will fulfill a pledge to increase defence spending to 2 per cent of its GDP.
With files from Bill Curry