Expanded EI eligibility and sickness benefits are being extended while the government works on a 21 st century EI system. The government is significantly increasing transfers to older Canadians and lower-income workers. And funding through the Strategic Innovation Fund and targeted support for clean tech seek to give Canada an edge in fast-growing, innovative industries.īut Budget 2021’s ambition goes far beyond these targeted efforts to boost the recovery. It also announced plans for an ambitious child care policy that will help boost women’s labour force participation and should provide a sizeable economic lift over time. It launched new programs to stimulate hiring, support technology adoption by small businesses, fund training and incentivize business investment-measures that will help accelerate Canada’s economic recovery. It extended key support programs for households and businesses, delivering on a pledge to “bridge the gap” to the other side of the pandemic. The federal government packed a lot into its first budget in two years. The new spending is an upside to growth and could lead to the Bank of Canada raising rates earlier or faster than otherwise.Tax increases are relatively modest mostly confined to previously announced measures, deferring the conversation about growth and potential revenue gaps to another day.But Budget 2021 goes further beyond conventional fiscal stimulus or targeted efforts to boost the recovery, touching everything from expanding EI eligibility to climate mitigation.
New spending covers extensions for key pandemic support programs (to slowly be phased out) and more targeted supports for the recovery, including a centerpiece national early learning and eventual $10/day childcare policy, a comprehensive and permanent program intended to boost women’s labour force participation over time.Deficits are $354 billion for 2020-21 and projected at $155 billion for 2021-22, $50 billion for the next 2 years, and still 1% of GDP at the end of the forecast horizon in 2025-26.This new spending is at the high end of the $70-$100 billion ‘stimulus’ announced in the 2020 Fall Economic Statement despite a much firmer economic backdrop.With Budget 2021, the federal government is betting big that major spending will boost economic growth, with just over $100 billion in new spending over the next 3 years.
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