Deputy Prime Minister and Finance Minister Chrystia Freeland delivered her first major speech since the budget on Thursday, outlining $8.9 billion in financial supports her government has introduced to help Canadians deal with rising inflation.
“We know that Canadians are worried about inflation and that they’re asking what their government is going to do about it,” Freeland said in a media statement.
“That’s why we have a new Affordability Plan — $8.9 billion in new support this year — that is going to put more money in the pockets of Canadians at a time when they need it most.”
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Freeland said her plan to address inflation and the affordability crisis has five parts: respecting the role of the Bank of Canada, investing in workers, managing the debt, creating good jobs and funding the suite of programs that make up the Affordability Plan.
Freeland’s 40-minute speech to the Empire Club in Toronto also touched on strategies to increase competitiveness and productivity and offered a pledge to increase financial supports if the economic situation worsens.
Conservative leadership candidate Pierre Poilievre has accused the Bank of Canada and its current governor, Tiff Macklem, of worsening inflation through its pandemic-era policy of quantitative easing.
He’s also vowed to fire Macklem if he becomes prime minister — a promise that has prompted criticism from some who say the Conservative MP is unfairly politicizing an institution that has always operated at arms-length from partisan politics.
Watch | Freeland details $8.9 billion dollars in economic supports for Canadians:
Calling the criticism of the Bank “economically illiterate,” Freeland said the Bank’s job is to tackle inflation and she reaffirmed that mandate late last year.
“The Bank has begun the work of bringing inflation back within target, and it has the tools and the expertise it needs to keep inflation from becoming entrenched,” she said.
Freeland said the Bank’s reputation was a key reason Canada’s AAA credit rating was reaffirmed and that the institution promotes economic stability.
“At this time of global economic and political volatility, undermining Canada’s fundamental institutions — very much including the Bank of Canada — is highly irresponsible, not to mention economically illiterate,” she said.
The ‘Affordability Plan’
The measures already announced by the federal government in the 2022 budget and cited by Freeland in today’s speech include:
Boosting the Canada Workers Benefit by $1.7 billion this year. Individual workers can now receive up to $1,395 a year in benefits, while a family can qualify for up to $2,403 annually. Those amounts would be boosted by $1,200 for individuals and $2,400 for families.
Increasing Old Age Security (OAS) by 10 per cent, providing up to $766 in new support in the first year starting in July for those 75 and older.
Providing a one-time Housing Affordability Payment of $500 for low-income Canadians.
Reducing the cost of child care by an average of 50 per cent by year’s end and bringing it to an average cost of $10 a day by 2025-26.
Providing free dental coverage for Canadians earning less than $90,000 a year, beginning with children under 12, in 2022.
Increasing benefits indexed to inflation, including OAS, the Guaranteed Income Supplement (GIS), the Canada Pension Plan, the Canada Child Benefit and the GST credit.
The federal government says the GIS is already 4.9 per cent higher than it was a year ago because of inflation, and that other indexed benefits will also increase.
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In her speech, Freeland compared Canada’s economic recovery to that of other G7 nations. She said Canada has recovered 117 per cent of the jobs lost during the pandemic — better than the 96 per cent recovery rate in the U.S. — and now has an unemployment rate of just 5.1 per cent.
“This is the strongest recovery in the G7. It’s the strongest jobs recovery in the G7 and Canada’s real GDP is 1.8 per cent above where it was in those awful first weeks [of the pandemic],” she said.
Freeland said that, despite those positive numbers, she knows some Canadians are suffering due to inflation, which she blamed on the pandemic, interruptions in global supply chains and Russia’s invasion of Ukraine.
Investing in workers, housing
While it is the Bank of Canada’s job to fight inflation, Freeland said the government can help by tackling other issues such as the shortage of workers, especially skilled workers.
“We are doing this by investing in immigration, skills, child care and housing,” she said in French.
Freeland said Canada has maintained its policies encouraging immigration throughout the pandemic and those new people coming to Canada will be welcomed by employers looking to staff up.
“In the budget, we also set out to invest in the workers who are already here,” she said. “That means ensuring our skilled trades workers can afford to travel to the parts of Canada where their services are desperately needed.”
Those workers, Freeland said, need housing and her government’s promise to double the number of homes built over the coming decade will help ensure people can find affordable places to live.
Managing the debt
Freeland said that while Canada has the lowest debt-to-GDP ratio in the G7, she wants debt to decline and said Canada’s “pandemic debt must, and will, be paid down.”
“In tabling the budget in April, I reaffirmed this as our fiscal anchor and I committed to a review and a reduction of government spending, because that is the responsible thing to do,” she said. “I am confident that our plan is the right one.”
Freeland added that she does “not underestimate the economic difficulties and uncertainty of the months to come.”
“We have been through two years of remarkable turbulence. Our challenge now is to land the plane — and a soft landing is not guaranteed.”
Opposition critical of repeat announcements
The NDP and the Conservatives have been pressing the Liberal government on the inflation issue for weeks. NDP Leader Jagmeet Singh issued a statement after the speech saying that the measures Freeland discussed are coming too late and will not help Canadians who need it now.
“People need real help. They need their government to get money back in their pockets so they can afford basic necessities,” Singh said in the statement. “Instead, the deputy prime minister is on Bay Street today making re-announcements that do nothing to help people today.
Conservative MPs Dan Albas and Gérard Deltell issued a statement after the speech saying Freeland’s efforts to make life more affordable will only make things worse.
“Canadians are in the grip of a cost-of-living crisis because of the flawed tax-and-spend approach of the Trudeau Liberals,” They said in the statement.
“This flawed economic approach eats away at the earnings of hard-working Canadians and ignores the most basic principle of economics: that spending during an inflationary crisis will only fuel inflation further,” the statement said. “Yet, the Liberals continue down this path with reckless abandon, inflicting more inflationary pain on Canadians.”