$13.2 billion in new spending over six years: No return to balanced budget in sight in federal economic update

Finance Minister Chrystia Freeland is postponing a balanced budget indefinitely and is instead taking a series of small steps to ease the public’s burden, but which add to a rapidly growing debt.

This latest update includes $13.2 billion in new spending over the next six years, a figure that rises to $21 billion when measures included in the spring budget are included.

The lion’s share of the new spending goes to the abolition of VAT for the construction of new rental housing and the construction of affordable housing, measures already announced in recent months.

Starting next year, due to rising interest rates, debt costs will exceed $52 billion, slightly more than the spending devoted annually to health transfers. It will certainly be a drag on Canada, which as recently as last year predicted a return to budget balance by 2028.

“Now it is clear that there is no possibility of returning to equilibrium. Impossible,” said Robert Asselin, a public finance expert and former advisor to the Trudeau government.

However, Wednesday’s statement contains a number of interesting small measures. These are the ones to remember.

Another listing for AirBnb

Faced with a housing crisis of historic proportions, the Trudeau government is giving cities and provinces a helping hand to deal with short-term rental platforms like AirBnB. Starting Jan. 1, cities that have adopted regulations will be able to disallow tax deductions related to costs incurred by property owners using these platforms, such as renovation costs. Ottawa will award $50 million over three years to cities to help enforce its regulations. These measures could eventually free up 30,000 homes, according to Minister Freeland.

Calm the burning of the banks

Ottawa is also tackling a series of bank fees that affect the most disadvantaged. This involves, firstly, reducing insufficient funds fees, which are sometimes as high as $50, but more broadly also making no-fee or low-fee accounts more accessible to more people. In addition, the Financial Consumer Agency of Canada (FCAC) will need to work with banks to allow more debit transactions, bill payments and transfers online without fees. Finally, Ottawa will give an independent ombudsman the power to resolve complaints against banks.

Travel more simply with children

Still aiming to stamp out “unwanted fees”, the government wants to force airlines to offer parents the option of taking their child aged 14 or under with them on the plane, without any additional cost

Parental leave for adoption

In addition to the benefits offered to new parents who choose to adopt a child, Minister Freeland plans to extend Employment Insurance to provide 15 weeks of parental leave that can be shared by the couple. Ottawa estimates the number of families that could benefit from it at 1,700, with a total estimated cost of $48 million over the next six years.

Tax holidays for psychotherapy

The federal government wants to remove GST on consultations with psychotherapists and counseling therapists. This surprise move is expected to cost the public treasury $50 million over the next five years.

An investigation into roaming charges

Roaming costs are often the source of many (bad) surprises for Quebec travelers outside the borders. Ottawa has given the Radio-television and Telecommunications Commission (CRTC) a mandate to investigate this practice and return with a report on ways to counter this scourge next year.

Media assistance

Chrystia Freeland announces an increase in aid to the media, a sector in crisis, increasing the limit on deductions for staff from $55,000 to $85,000. It will also increase the tax credit rate from 25% to 35% over four years. These measures will cost $129 million over five years.

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