Government of Canada Releases $491B Budget, Deficit Projected at $40B
Canada’s Deputy Prime Minister and Minister of Finance, Chrystia Freeland (Photo via @1059TheRegion / Twitter).
Canada’s Deputy Prime Minister and Minister of Finance, Chrystia Freeland released Canada’s 2023 federal budget today (Tuesday, March 28), continuing deficit spending targeted at helping Canadians’ pocketbooks, public healthcare, and a clean economy.
The budget projects program spending to reach nearly $491 billion in the next fiscal year, while the deficit is set to reach $40 billion. Despite a gloomy forecast of slowing economic growth and weaker tax revenue, the Liberal government is pushing its fiscal spending plan forward.
In a press release, Freeland stated that the 2023 budget “will deliver new, targeted inflation relief for the Canadians who need it most; stronger public health care, including dental care for millions of Canadians; and significant investments to build Canada’s clean economy.”
The biggest takeaways from the announcement, in terms of direct impact on Canadians’ pocketbooks, come via a one-time tax rebate aimed at grocery affordability, cracking down on “junk fees” that crop up on everything from concert tickets to airfare, adjustments to the mortgage code of conduct and an automatic tax filing system.
The federal government plans to increase spending by nearly $60 billion and no longer projects to balance its books by the 2027-28 fiscal year. Instead, it projects the country to sit at a $14 billion deficit by then.
Debt-to-GDP will rise from 42.4% this year to 43.5% next year. The government projects debt-to-GDP to decline slowly over the next five years.
To help pay for the increase in government spending, Freeland intends to find $15 billion over the next five years by cutting back travel costs, use of outside consultants, and a review of departmental spending.
This is Freeland’s third budget as Canada’s Minister of Finance and her first in which the COVID-19 pandemic is not centre stage.
The guidance we give our clients remains the same. Invest in blue chip stocks and take advantage of the rising interest rate environment with some short-term fixed-income securities such as bonds and Guaranteed Investment Certificates.
As always, if you have any questions about today’s Market Update, you can call us at 604-643-0101 or email cashgroup@cgf.com
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