Trudeau Considers Adding New Social Programs to Fiscal Plan

Prime Minister Justin Trudeau’s government is considering allocating billions in annual permanent spending for new programs that may be disclosed as early as next month, according to a senior government official.

Finance Minister Chrystia Freeland’s fiscal statement at the end of November could include details on government funding plans for child care, prescription drugs and other long-term priorities, the official said, speaking on condition they not be identified because they aren’t authorized to discuss the plans in public.

The person said the finance department is seeking to determine the available fiscal room, but that the government hasn’t settled on any one number. They cited C$20 billion ($15 billion) as an example, which would represent just under 1% of economic output. A spokesperson for the finance department declined to comment.

Trudeau Considers Adding New Social Programs to Fiscal Plan

If plans move ahead, the fiscal update would mark the first time Trudeau’s government puts a dollar value on a longer-term ambition, laid out by the prime minister last month, to put more funding into social programs and green initiatives. It’s the part of spending that Freeland has pledged would be attached to some type of fiscal guardrail, as opposed to the government’s “whatever it takes” approach to emergency aid related to Covid-19.

In July, the Canadian government estimated its budget deficit would soar to C$343 billion this year, or 16% of total output. It has since announced another C$40 billion in additional spending.

Freeland used her first major speech as Canadian finance minister Wednesday to make a fervent defense of those mounting deficits, and lay the groundwork for more post-pandemic spending. “The risks of fiscal inaction outweigh the risks of fiscal action,” she told the Toronto Global Forum. “Doing too little is more dangerous and potentially more costly than doing too much.”

While details of the daycare program have yet to be ironed out, the federal government would offer it up to provinces who choose to co-finance spending, the official said. On pharmacare, Trudeau’s administration hasn’t firmed up how narrow or wide the plan will be.

The economic statement is expected to be divided into two parts, the official said. The first will focus on emergency funding to help Canada weather the second wave of Covid-19 cases, with no fixed budget due to the uncertainty surrounding the public health situation. The second part will elaborate on growth and post-pandemic spending the government plans to elaborate on in a full budget early next year.

In addition to pandemic support and long-term initiatives, there could be one-off funding for climate change and environmental projects, the official said, citing funding for hydrogen fuel capacity, green innovation and transit.

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