Deputy Prime Minister and Minister of Finance Chrystia Freeland today delivers her first major speech since the budget, outlining the $8.9 billion in financial support measures her government has put in place to help Canadians cope with rising inflation.
“We know Canadians are worried about inflation and are asking what their government is going to do about it,” Freeland said in a statement.
“That’s why we have a new affordability plan — $8.9 billion in new support this year — that will put more money in the pockets of Canadians when they need it most.
Freeland said his plan to fight inflation and the affordability crisis has five components: respecting the role of the Bank of Canada, investing in workers, managing the debt, creating good jobs and financing the series of programs that make up the affordability plan.
Freeland’s 40-minute speech at the Empire Club in Toronto also touched on strategies to increase competitiveness and productivity and offered a pledge to increase financial supports if economic conditions worsen.
Conservative leadership candidate Pierre Poilievre has accused the Bank of Canada and its current governor, Tiff Macklem, of worsening inflation through its pandemic-era quantitative easing policy.
He has also vowed to fire Macklem if he becomes prime minister – a pledge that has drawn criticism from some who say the Tory MP is unfairly politicizing an institution that has historically operated at a distance from partisan politics.
Watch: Freeland details $8.9 billion in economic supports for Canadians:
Calling the Bank’s critics “economically illiterate”, Freeland said the Bank’s job is to fight inflation and she reaffirmed that mandate late last year.
“The Bank has started to bring inflation back within target, and it has the tools and the expertise it needs to prevent inflation from taking hold,” she said.
Freeland said the Bank’s reputation was a key reason Canada’s AAA credit rating was reaffirmed and the institution promotes economic stability.
“In this time of global economic and political volatility, undermining Canada’s fundamental institutions – including the Bank of Canada – is highly irresponsible, let alone economic illiteracy,” she said.
The “affordability plan”
Measures already announced by the federal government in Budget 2022 and cited by Freeland in today’s speech include:
Increase 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 a maximum of $2,403 a year. These amounts would be increased by $1,200 for individuals and $2,400 for families.
Increase Old Age Security (OAS) by 10%, providing up to $766 in new support in the first year starting in July.
Provide a one-time housing affordability payment of $500 to low-income Canadians.
Reduce the cost of child care by 50% on average by the end of the year and bring it to an average cost of $10 per day by 2025-2026.
Provide free dental coverage to Canadians earning less than $90,000 per year, starting with children under 12, in 2022.
Increase inflation-indexed benefits, including OAS, Guaranteed Income Supplement (GIS), Canada Pension Plan, Canada Child Benefit and GST Credit.
The federal government says the GIS is already 4.9% higher than it was a year ago due to inflation, and other indexed benefits will also rise.
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In his speech, Freeland compared Canada’s economic recovery to that of other G7 countries. She said Canada had recovered 117% of the jobs lost during the pandemic – better than the 96% recovery rate in the United States – and now had an unemployment rate of just 5.1%.
“This is the strongest recovery of the G7. It’s the strongest jobs recovery in the G7 and Canada’s real GDP is 1.8% higher than it was in those terrible first weeks. [of the pandemic],” she says.
Freeland said that despite the positive numbers, she knows some Canadians are hurting due to inflation, which she blamed on the pandemic, disruptions to global supply chains and the invasion of Ukraine by Russia.
Invest in workers, housing
While it’s the Bank of Canada’s job to fight inflation, Freeland said the government can help by addressing other issues such as the shortage of workers, especially skilled workers.
“We do 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 new people arriving in Canada will be welcomed by employers looking to recruit staff.
“In the budget, we have also planned to invest in the workers who are already here,” she said. “That means making sure our skilled workers can afford to travel to areas of Canada where their services are desperately needed.”
These workers, Freeland said, need housing, and his government’s promise to double the number of homes built over the next decade will help ensure people can find affordable housing.
Freeland said that although Canada has the lowest debt-to-GDP ratio in the G7, she wants the debt to go down and said “Canada’s pandemic debt must and will be repaid.”
“In tabling the budget in April, I reaffirmed that this is our fiscal anchor and committed to reviewing and reducing public spending, as it is the responsible thing to do,” she said. “I am convinced that our plan is the right one.”
Freeland added that she “does not underestimate the economic difficulties and uncertainty of the months ahead.”
“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 criticizes repeated announcements
The NDP and the Conservatives have been pressing the Liberal government on the issue of inflation for weeks. NDP Leader Jagmeet Singh released a statement after the speech saying the measures Freeland discussed come too late and will not help Canadians who need them now.
“People need real help. They need their government to get money back into their pockets so they can afford basic necessities,” Singh said in the statement. “Instead, the Deputy Prime Minister is on Bay Street today making new announcements that do nothing to help people today.
Tory MPs Dan Albas and Gerard Deltell released 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 Trudeau Liberals’ flawed approach to taxes and spending,” they said in the statement.
“This flawed economic approach eats away at the incomes of hard-working Canadians and ignores the most basic economic principle: 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.”