Last week the Canadian federal government released the budget for 2021, detailing $101.4 billion in new spending. The Deputy Prime Minister and Finance Minister Chrystia Freeland placed emphasis on repairing the economic damage endured during COVID-19 but the recovery period is expected to be long and strenuous.
The budget titled ‘A Recovery Plan for Jobs, Growth, and Resilience’ projects the federal deficit to drop to $154 billion this fiscal year, compared to the $354.2 billion that was recorded in at the end of 2020. The government plans to spend 4.2% of the country’s GDP over the next three years in order to bounce back from the current recession and $2.2 billion will be allocated to building Canada’s drug treatment and vaccine industry.
CTV reported that in a press conference Freeland said “this budget is a smart, responsible, ambitious plan for jobs and growth, that is designed precisely to heal the specific wounds of the COVID-19 recession and to permanently strengthen Canada’s economic muscle.”
How will the budget impact you?
Aside from Quebec-based families, Canadian households have been struggling with high costs when it comes to child care. The federal government has reassured that measures are being taken to provide a more “consistent and affordable framework” moving forwards.
Over the next five years $30 billion will be invested in child care. The government reported that they are aiming to cut down on the costs of regulated child care in the country to $10 per day on average...by the end of 2022, the government is aiming to see a 50 per cent decrease in average fees.”
This part of the budget is focused on providing better wages for early childhood educators, easier access to child care and funding for non-profit child care providers. Support for Indigenous families are also detailed, as the government hopes to improve before-and-after school learning for children living on reserves.
2020 has caused the housing market to fluctuate and low interest rates have sent housing prices through the roof which is forcing many to look into public housing options. The federal government has attempted to create more affordable housing for Canadians, setting aside a large portion of money for the Canadian Mortgage and Housing Corporation over several years.
This money is meant to “ramp up the Rapid Housing Initiative of which 25 per cent of funding will go specifically to service women-focused house needs; invest in the Affordable Housing Innovation Fund; prop up the Canada Housing Benefit; and bolster the Federal Community Housing Initiative. The government is also proposing to reallocate previously announced funding through National Housing Co-Investment Fund and the Rental Construction Financing Initiative.”
Canada’s government also hopes to lower the rates of homelessness across the country, investing millions in their ‘Reaching Home’ initiative, as well as putting money towards building a pilot program to specifically reduce the rates of homeless veterans.
Additionally, the budget highlights that by January 1st, 2022, the government is hoping to implement a national, annual one per cent tax on “the value of non-resident, non-Canadian owned residential real estate that is considered to be vacant or underused.”
Long-term Care & Senior Citizens
COVID-19 exposed that long-term care facilities have been understaffed, under-funded and continue to face unfair conditions for both residents and employees. The government has acknowledged the flaws in the current system and have proposed $12 billion to find solutions to correct the injustice endured by the elderly and those who take care of them.
The government is investing billions to Health Canada in order to develop a national standard for long-term care across the provinces and territories and proposes. The development of an ‘Age Well at Home’ initiative is in the works in order to make it easier for seniors to live at home with the support of their community. Statistics Canada will also be receiving some of the money to update data collection on “supportive care, primary care, and pharmaceuticals.”
To help cope with immediate economic needs caused by the pandemic, “the Liberals are pitching to deliver a one-time payment of $500 in August to those who will be 75 and over as of June 2022. In the long-term, they will introduce legislation to raise Old Age Security payments by 10 per cent ‘on an ongoing basis’ as of July 2022.”
The pandemic has led to high unemployment rates in young adults more than any other age demographic in Canada and many have been stressed as they continue to accrue student debt. The government is setting aside $5.7 billion to help create more employment opportunities for students, recent graduates and trainees.
This money is meant to help “transition students and recent grads from the Canadian Student Loans Program to a new Canada Student Financial Assistance Program” which will provide support to those who need it and make it easier to pay off student debt. “The budget also details a legislative plan to absorb interest accrued from the student loans and Canada Apprentice Loans program until March 31, 2023.”
Money is also going towards the Student Work Placement Program, hoping to connect almost 50,000 more students and grads with full time employment over the next several years. There will also be funding to build the Youth Employment and Skills Strategy, and the Canada Summer Jobs program which aims to produce approximately 75,000 new job placements by summer 2022.
Many are still unemployed due to the pandemic, but the government plans to come up with support systems to help Canadians to get back on their feet and find permanent employment again.
“The government is proposing to tack on 12 additional weeks to the Canada Recovery Benefit application period, to a maximum of 50 weeks. To eventually wean recipients off of the emergency support, the first four weeks would be paid out at the regular $500 per week amount but would decrease to $300 per week for the remaining eight weeks.”
Additionally, “a similar extension would be applied to the Canada Recovery Caregiving Benefit, which would be stretched out for an additional four weeks, to a maximum of 42 weeks at $500 per week.”
The budget also proposes to make some changes to Canada’s Employment Insurance (EI) program so Canadians can continue to access the money they need moving forwards. Money was also set aside to reform long-term EI to better support self-employed and freelance workers.
The government plans to make changes to the Employment Insurance Act and the Canadian Labour Code to ensure job protection when accessing sickness benefits. Billions will also be spent in order to extend EI sickness benefits from 15 to 26 weeks, which is expected to kick in by summer 2022.
Businesses have been hit hard with the lack of economic spending during the pandemic. Many have had to lay off long-time employees or close their businesses altogether. The government plans to extend the Canada Emergency Wage Subsidy to September 25th, but the subsidy rate will begin to gradually decrease on July 4th.
The emergency subsidy will eventually be replaced with the “Canada Recovery Hiring Program, which is proposed to span from June to November” in order to encourage and facilitate hiring of new or previously laid-off employees with hopes to “offset a portion of the extra costs employers take on as they reopen.”
Over the next 5 years Canadians can expect to see economic improvements but the government’s priority right now is to provide vaccinations to as many people as possible in order for the country to recover from the current recession.
If you are sending money transfers or converting CAD to other currencies, you can even look at Remitbee’s online money transfer service and currency exchange services as a way to save in 2021. We offer competitive rates with fees that are often as low as $0.
By Surina Nath