Today, Deputy Prime Minister and Finance Minister Chrystia Freeland delivered the 2021 Federal Budget, titled “A Recovery Plan for Jobs, Growth, and Resilience” in the House of Commons. It has been two years since the federal government released a budget, and this year’s is arguably the most awaited due to the economic decline caused by the COVID-19 pandemic. This budget focuses on navigating the country throughout the remainder of the pandemic by providing billions of dollars towards measures that assist Canadians in recovery and taking steps to build the economy following the damaging effects of the pandemic.
As Finance Minister Chrystia Freeland began her speech, she took a moment to address the magnitude of the budget. “This budget is about finishing the fight against COVID. It's about healing the economic wounds left by the COVID recession. And it's about creating more jobs and prosperity for Canadians in the days and decades to come.” Finance Minister Freeland announced the government’s plan towards economic recovery and supporting Canadians through addressing three fundamental challenges:
1. Conquering COVID-19;
2. Navigating our way out of the COVID-19 recession;
3. Building a more resilient Canada.
The government is investing more than $101 billion over the years 2021 - 2024. 2020’s deficit is projected at $354.2 billion while year 2021 - 2022 is projected to be $154.7 billion. The deficit is set to gradually decline to $30.7 billion in 2025 - 2026.
A key point of the budget is Canada’s plan to invest $10.1 billion to extend the wage subsidy. The government is also extending the rent subsidy and lockdown support until September 25, 2021, which will cost $1.9 billion. The Canada Recovery Benefit will be extended for 12 weeks, to up to 50 weeks. The Canada Recovery Caregiving Benefit will also be extended by 4 weeks, to up to 42 weeks.
The government is investing up to $30 billion over the next five years towards a national child care program, a move that is regarded as beneficial towards stimulating the economy and assisting women in returning to the workforce. After five years, the government announced that they will continue to provide $8.3 billion a year.
Furthermore, billions of dollars will be put towards extending aid during the third wave by creating new recovery programs and extending previous ones to assist Canadians through the rest of the pandemic.
See below the key investments by the federal government included in the 2021 budget:
The government is launching the Digital Adoption Program which will create thousands of jobs for young Canadians and provide 160,000 businesses with digitization, e-commerce and finance support to help them buy and adopt new technology
$500 million over the next five years and $100 million per year going forward to expand the Industrial Research Assistance Program
$87.4 million over the next five years to modernize federal procurement and diversify the federal supplier base
$450 million over the next five years to the renewed Venture Capital Catalyst Initiative to increase venture capital available to entrepreneurs
$7.2 billion investment over the next seven years to the Strategic Innovation Fund
$3 billion to Health Canada over the next five years to help provinces and territories meet long term care standards
$90 million over the next three years to Employment and Social Development Canada to launch the Age Well at Home initiative
An increase to Old Age Security for Canadians aged 75 and older of up to $766 in the first year and a one-time $500 payment in 2021
An investment of $375 million to Global Affairs Canada to support Canada’s international COVID-19 response, focusing on the health needs of developing countries
$43.1 billion toward the Canada Health Transfer which provides support to provincial and territorial health care systems
$45 million over the next two years to Health Canada, the Public Health Agency of Canada and the Canadian Institutes of Health Research to develop national mental health service standards
$100 million over the next three years to support projects for innovative mental health interventions for populations disproportionately impacted by COVID-19
$50 million over the next two years to support those with trauma and post-traumatic stress disorder (PTSD)
$2.2 billion over the next seven years towards growing Canada’s life sciences sector
$250 million over the next three years to the Canadian Institutes of Health Research Clinical Trials Fund
$1 billion over the next seven years to support the Strategic Innovation Fund toward domestic life sciences and bio-manufacturing firms
RECOVERING FROM THE PANDEMIC
Support for Businesses:
Wage subsidy, rent subsidy and lockdown support extended until September 25, 2021
$595 million into the new Canada Recovery Hiring Program, to make it easier for businesses to hire back laid off workers or bring new ones
Regional Relief and Recovery fund and the Indigenous Business Initiative application deadline extended until June 30, 2021
Amendments to the Canada Small Business Financing Program to increase annual financing by $560 million, supporting approximately 2,900 additional small businesses
Support for Workers:
Temporarily waiving the one-week waiting period for Employment Insurance claims
$3.9 billion over three years, starting in 2021-22, for a suite of legislative changes to make Employment Insurance more accessible to Canadians
12 additional weeks of the Canada Recovery Benefit up to a maximum of 50 weeks
$8.9 billion for the next 5 years to the Canada Workers Benefit, which will be extended to 1 million people in low-wage jobs
$7 billion over the next five years for Employment Insurance reform
$721 million over the next two years for student placement, youth skills as well as Canada Summer Jobs
$11.9 million over the next three years to Employment and Social Development Canada to reform the eligibility process for federal disability programs
Hardest Hit Communities and Sectors:
Over $18 billion over the five years to improve quality of life and create new opportunities to those in indigenous communities across Canada
$1 billion to the universal broadband service to rural and remote communities
Government will be waiving the interest on federal student loans through the years 2022 - 2023
$500 million to the Tourism Relief Fund and $1 billion over the next three years for the tourism sector
$2 billion toward the aerospace sector including a $250 million investment over the next three years for regional development agencies to deliver an Aerospace Regional Recovery Initiative
$420 million over the next three years toward the arts, culture, heritage and sport sectors
$3.8 billion over the next seven years toward affordable housing
$612 million over the next two years toward the homelessness strategy
$300 million to fund initiatives to fight racism and support Black-led non-profit organizations
$75 million over the next five years to combat systemic racism through recruitment and training reform
$601 million over the next five years for a plan to end gender-based violence
Increased funding toward sexual assault service providers, military justice system and victim supports
$960 million over the next three years for a new Sectoral Workforce Solutions Program
$5 billion over the next seven years to the Net Zero Accelerator, which will help Canada reach its goal of lowering carbon emissions and moving towards clean technology
$8 billion towards support for projects that aim to reduce domestic greenhouse gas emissions across the Canadian economy
An investment tax credit for capital invested in projects that aid in reducing carbon dioxide emissions annually starting in 2022
50% income tax reduction for businesses that manufacture zero-emissions technologies starting January 2022 and will be eliminated by January 2032
$14.9 million over the next four years toward a Federal Clean Electricity Fund to purchase renewable energy certificates for all federal government buildings
OTHER KEY INVESTMENTS
The budget will include a luxury tax effective from 2022 on new cars and private aircrafts valued at more than $100,000 and boats worth over $250,000
New national tax on vacant residential property owned by non-resident non-Canadian owners from January 2022
A new Digital Services Tax with a rate of 3% on revenue generated from Canadian data and content
$312 million over the next five years on gun control strategies
See here to access the federal 2021 budget in its entirety.
See here to watch Finance Minister Chrystia Freeland deliver the 2021 Federal Budget.
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