2021 Economic & Fiscal Update
On December 14, 2021, we released the Economic and Fiscal Update to provide Canadians with a look at our nation's finances and our plan to finish the fight against COVID-19, make life more affordable for Canadians, and ensure our economic recovery leaves no one behind.
On top of existing support measures from Budget 2021 and our Speech from the Throne, please see below for highlights that may be of interest to you along with other business updates:
Finishing the fight against COVID-19
- $29 billion to finish the fight against COVID-19
Preparing for Omicron:
- An additional $4.5 billion
- Up to $2 billion over two years for the procurement of COVID-19 therapeutics, and associated logistics and operational costs.
- $1.7 billion to continue supporting provinces and territories in securing the rapid testing supplies they need to keep Canadians safe and healthy, including through expanded school and workplace testing programs.
- Ensuring that third doses and booster shots are free for all Canadians, also include options to procure vaccine adaptations, such as those to protect against mutations or variants of concern. We're also investing in new anti-viral drugs for COVID-19 patients that prevent hospitalizations and can save lives.
Clean and Healthy Indoor Air by Improving Ventilation
- Refundable Small Businesses Air Quality Improvement Tax Credit of 25% on eligible air quality improvement expenses incurred by small businesses to make it more affordable for them to invest in safer and healthier ventilation and air filtration. Businesses would receive the credit on eligible expenses incurred up to a maximum of $10,000 per location and $50,000 in total.
- Up to an additional $100 million to provinces and territories through the existing Safe Return to Class Fund, as well as $10 million to First Nations for on-reserve schools.
- An additional $70 million over three years, starting in 2022-23, to Infrastructure Canada to support ventilation projects in public and community buildings like hospitals, libraries, and community centres.
Support for people
Help for Seniors Receiving Guaranteed Income Supplement and
- Up to $742.4 million for one-time payments to alleviate the financial hardship of GIS and Allowance recipients who received the Canada Emergency Response Benefit (CERB) or the Canada Recovery Benefit in 2020.
Help for Students Affected by CERB Payments
- Debt relief to students who received, but were ineligible for, the CERB but were eligible for the Canada Emergency Student Benefit (CESB) by allowing their CERB-related debt to be offset by the amount they would have received from CESB during the same benefit period.
Extending the Home Office Expense Deduction
- Extending the simplified rules for deducting home office expenses and increase the temporary flat rate to $500 annually. These rules will apply to the 2021 and 2022 tax years.
Early Learning and Child Care Investments to Make Life More Affordable
- While the Government of Ontario has not agreed to our Canada-Wide Early Learning and Child Care Agreement yet, average savings of 50% average fee reduction is estimated at $5,960 per child annually in Ontario. Estimated average savings per child at $10/day is $9,320 annually.
Support for businesses
Relieving Supply Chain Congestion
Supply chain disruptions around the world have made it harder for Canadians and businesses to get the products and supplies they need, and in many cases are contributing to rising prices. The recent devastating flooding in British Columbia has only exacerbated these pressures.
To help strengthen supply chains and address bottlenecks, in 2021-22, the government will launch a new, targeted call for proposals under the National Trade Corridors Fund to assist Canadian ports with the acquisition of cargo storage capacity and other measures to relieve supply chain congestion. The Fund will dedicate up to $50 million to support eligible priority projects. Further details on the targeted call for proposals will be announced in the coming weeks.
Help to Pay Costs of Climate Change
- A portion of the proceeds from the price on pollution, an estimated sum of at least $200 million, will be returned to small and medium-sized enterprises through new federal programming in backstop jurisdictions (currently Alberta, Saskatchewan, Manitoba, and Ontario), beginning in 2022-23.
Fiscal update
Our economic plan is working – Canada has largely recovered from the economic damage inflicted by COVID-19 and is poised for robust growth in the months to come. Here are some of the fiscal highlights in Canada:
- We have now surpassed our target of creating a million jobs, the second fastest jobs recovery in the G7. In fact, we have recovered 106% of the jobs lost at the peak of the pandemic, significantly outpacing the US where just 83% of lost jobs have been recovered so far.
- Our GDP returned to near pre-pandemic levels in the third quarter of this year. Our GDP growth of 5.4%, in the third quarter, outpaced 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.
- The size of the Canadian economy this year will be $2.48 trillion, almost exactly what we predicted it would be in the 2018 budget when we had no idea we would soon be grappling with a global pandemic.
- Canadian exports rose in October and our balance of trade for goods had a surplus of $25.1 billion.
- Fewer businesses went bankrupt last year than in 2019, before the pandemic. In fact, there are now an additional 6,000 active businesses in Canada compared to before the pandemic.
- Household employment income is now 7% per cent above its pre-crisis level. And Canadians have used this time when we all hunkered down to pay down their personal debt.
- In October, inflation in Canada increased to 4.7% year over year but private sector forecasters expect inflation to moderate to a level around the Bank of Canada's 2% inflation target by the end of 2022.
Preserving Canada's Low Debt Advantage
Canada’s history of prudent fiscal management means that, even with unprecedented investments to fight the virus, Canada continues to have the lowest net debt-to-GDP ratio relative to international peers. In fact, over the course of the pandemic, Canada has even increased its low debt advantage.
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 2018-19.
Other measures
Immigration to Grow Our Economy and Welcome New Canadians
- $85 million to process more permanent resident and temporary resident applications and reduce processing times in key areas affected by the pandemic. It will also speed up the process to citizenship
Enhanced Support for Teachers
- Expand the Eligible Educator School Supply Tax Credit to allow them to claim a refundable tax credit worth 25% (up from 15%) of up to $1,000, and to ensure that purchased supplies may be eligible no matter where they are used.
- Expand the list of eligible teaching supplies to include electronic devices such as graphing calculators, digital timers, and tools for remote learning.
Compensation for First Nation Children and Families
- $40 billion to respond to the order of the Canadian Human Rights Tribunal, compensate for harms by the First Nations Child and Family Services program and for delays or denials in needed children’s services, and support long-term program reforms to make sure communities have the support they need to keep families together.
For the full update, click here: https://www.budget.gc.ca/efu-meb/2021/home-accueil-en.html