Wellington Dupont's 2022 Federal Fall Economic Statement Summary

Today, the Honourable Chrystia Freeland, Canada’s Minister of Finance and Deputy Prime Minister, delivered the 2022 Fall Economic Statement in the House of Commons. This Statement, named Building an Economy that Works for Everyone, unveils the latest fiscal update. Minister Freeland warned of a potential recession in 2023 and provided information on the state of the nation’s economy as inflation and the impact of rising interest rates take effect on Canadians.

Building an Economy that Works for Everyone focuses on economic growth and helping Canadians with the increasing cost of living. Some of the most significant investments focus on affordable housing, jobs and skills training, clean technologies, and making life more affordable.

Summary

The federal deficit for the 2022-2023 fiscal year is $36.4 billion, much lower than the forecasted $52.8 billion in the spring budget. The government projects a $4.5 billion surplus by 2027-2028. However, the “downside” scenario indicates a deficit of $49.1 billion for this fiscal year.

The Statement’s new spending notes $22.1 billion over the next six years, with an added $8.5 billion as a provision for “anticipated near-term pressures”.

The projected real GDP growth is just above zero for the next several quarters. As a result, the unemployment rate is projected to increase from an average of 5.4% in 2022 to 6.2% by the end of 2023.

Making Life More Affordable for Canadians

Highlights include:

• Topping up the Canadian Housing Benefit to provide a tax-free payment of $500 directly to 1.8 million low-income renters who are struggling with the cost of housing.
• Creating the new Tax-Free First Home Savings Account, which would give prospective first-time homebuyers the ability to save up to $40,000, tax-free.
• Introducing a refundable Multigenerational Home Renovation Tax Credit.
• Providing payments to families totalling up to $1,300 per child, over the next two years, through the Canada Dental Benefit.
• Providing $4 billion over six years, starting in 2022-2023, to automatically issue advance payments of the Canada Workers Benefit to people who qualified for the benefit in the previous year, starting in July for the 2023 taxation year.
• Permanently eliminating interest on federal student and apprentice loans which would cost $2.7 billion over five years.
• Temporarily doubling GST payments for six months for low-income earners to provide inflation relief.
  

Jobs Growth and the Economy

The government is proposing to provide $250 million over five years, starting in 2023-2024, for new programs through Employment and Social Development Canada to help Canadian workers thrive in a changing global economy. Specific measures include:

• The Sustainable Jobs Training Centre - to bring together workers and employers to help 15,000 workers upgrade or gain new skills for jobs in a low-carbon economy.
• A new sustainable jobs stream under the Union Training and Innovation Program.
• The Sustainable Jobs Secretariat - to provide up-to-date information on federal programs, funding, and services across government departments.
• An additional $60 million over three years to support existing federal and provincial programs (more details to come in 2023).

The government will also launch the Canada Growth Fund by the end of 2022, to make critical investments needed to meet Canada’s climate and economic goals. The Growth Fund will enable tailored investments based on a project or company’s need or risk, to help unlock private investment and create new jobs.

Tax on Share Buybacks

• A corporate tax of 2% would apply to the net value of share buybacks by public corporations.
• This tax is expected to raise around $2.1 billion in revenue over five years.
• More information will be provided on this tax in the 2023 Budget.
  

Improving Regulatory Processes for Large Projects

• Providing up to $1.28 billion over six years, starting in 2022-2023, with $0.5 million in remaining amortization and $55.4 million per year ongoing to the Impact Assessment Agency of Canada, the Canada Energy Regulator, the Canadian Nuclear Safety Commission, and ten other federal departments.
  

Investment Tax Credit for Clean Technologies

• The government is implementing an Investment Tax Credit for Clean Technologies - a refundable tax credit that will cost $6.7 billion over the next five years.
• The tax credit would cover up to 30% of investments in clean technologies, with a focus on net-zero technologies, battery storage solutions, and clean hydrogen.
  

Tax Credit for Clean Hydrogen

• An investment tax credit to support investments in clean hydrogen production.
• the Department of Finance will launch a consultation on how best to implement this credit.
  

Ukraine Sovereignty Bond

• A $500 million Sovereignty Bond issued to financially assist the Government of Ukraine.

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Watch Finance Minister Chrystia Freeland deliver the 2022 Fall Economic Statement