Earlier this afternoon Deputy Prime Minister and Minister of Finance Chrystia Freeland released Budget 2022: A Plan to Grow Our Economy and Make Life More Affordable. Coming at a time of global instability, rising inflation, and pandemic-related uncertainty, the Budget aims to advance election commitments made by the Liberals while laying the groundwork for hopeful and much needed economic recovery. In doing so, the federal Liberal government focused on a few key themes: making life more affordable, investing in economic development, and investing in the clean economy. Not surprisingly, the Budget also takes modest steps to bolster NATO defence spending, and details new measures intended to improve healthcare.
As recent as January 2022, the expectation was created that this would be a back-to-basics Budget with less spending. However, with the recent agreement with the NDP to sustain the Liberal minority in the House of Commons until 2025 (in exchange for key commitments on healthcare, affordability, climate change, workers rights, Indigenous reconciliation, taxed and democratic reform) and the war in Ukraine, much has changed. New programs and funding were deemed to be required to satisfy newly important imperatives for the government, and of course key stakeholders.
Relative to pre-pandemic Budgets this fiscal plan contains a wholly new quantum of spending and stimulus. That said, the deficit remains lower than expected, and the government believes that Canada will also see the second fastest recovery in the G7 by the end of this year. But while being timely in its approach to emerging themes on the domestic and world stage, they have not abandoned the “back-to-basics” intent. The Budget attempts to address issues traditionally most important to individuals –ensuring Canadians have a roof over their head through affordable housing commitments, access to healthcare though investments to address surgical backlogs and implement dental care, and jobs to support their families through investments to help people transition back to work and settle immigrants.
While the extra COVID spending could have meant (and might still mean) disaster for long-term fiscal prudency, this Budget signals much more optimism. With rising natural resources prices, the government has been given the room to add expenditures while also lowering debt-to-GDP, its fiscal anchor. However, the Conservatives will point out that good times do not last forever and that more should be done to position Canada for tougher roads ahead in the context of rising interest rates and inflationary pressures. Though these may be valid criticisms, the investments in defence, healthcare, and affordable housing are all timely, and seem to have the support of most of the electorate.
For their part, the opposition leaders – Candice Bergen (CPC), Yves-François Blanchet (BQ), and Jagmeet Singh (NDP) – will need to carefully calibrate their responses over the coming days and weeks. While there is no risk of an election at this point soon, how the parties respond to this Budget will have a lasting impact on voters’ perceptions of the parties likely through the next election.