Hon. Chrystia Freeland, Deputy Prime Minister and Minister of Finance, has delivered the federal government’s Fall Economic Statement (FES) to the House of Commons. The government has focused on several key issues, including housing, affordability, the green economy, infrastructure, modernizing taxes, and protecting the financial sector.
New funding of $15 billion for the Apartment Construction Loan Program (previously the Rental Construction Financing Initiative), designed to support the construction of an additional 30,000 new homes across Canada.
Additional $1 billion over three years starting in 2025-26 for the Affordable Housing Fund that will support non-profit, co-op, and public housing providers build an additional 7,000 homes by 2028.
Reforms to the Affordable Housing Fund and the Apartment Construction Loan Program in early 2024 in an effort to reduce red-tape and increase accessibility of the programs.
New legislation to establish the Department of Housing, Infrastructure and Communities – a rebranding of Infrastructure Canada, that clarifies the departments powers, duties and functions.
Financial Sector Modernization
New legislation through Budget 2024 to introduce a consumer-driven banking framework that would regulate third-party access to consumers’ financial data.
Amendments to the Canadian Payments Act to expand eligibility in Payments Canada to allow more payment service providers, with the goal of lowering transaction costs and faster payment processing.
Clean Energy and Critical Minerals
Expanding the Canada Growth Fund to be the principal federal entity for issuing carbon contracts for difference (CCFDs) and will allocate $7 billion of its current $15 billion to issue the CCFDs and offtake agreements.
A plan to improve the efficiency of project permitting and the impact assessment process for major projects by the end of the year, and that the “Ministerial Working Group on Regulatory Efficiency for Clean Growth Projects” is supporting those efforts with the goal of releasing more details in the coming months.
Regarding the government’s timeline for its Investment Tax Credits, the government shared the following timeline for the introduction of legislation:
CCUS (Carbon Capture Utilization and Storage): Winter 2023
Clean Technology: Winter 2023
Labour Requirements: Winter 2023
Clean Hydrogen: Spring 2024
Clean Technology Manufacturing: Spring 2024
Clean Electricity: Fall 2024
Extend current federal fiscal capacity, the government announced it will be working collaboratively with Canadian pension funds support more investment opportunities for pension funds and other institutional investors in Canada.
Explore removing the “30 per cent rule” from pension funds’ investments in Canada.
New requirement for large federally regulated pension plans to disclose the distribution of their investments by jurisdiction and asset type per jurisdiction to OSFI, with that information being made publicly available.
Economic and Fiscal Projections
Annual real GDP growth of 7% from 2024-2027
Federal debt of $1.173 trillion for 2022-23 to grow to $1.362 trillion by 2028-29
Projected defect of $35.3 billion for 2022-23 to shrink to $18.4 billion by 2028-29
Public debt charges of $35 billion for 2022-23 to grow to $60.7 billion by 2028-29
Under continued pressure to address affordability and housing crises across the country, while exercising fiscal restraint, Minister Freeland focused her update on the importance of foundational investments. Despite the projection of increasing debt servicing costs ($46.5B this fiscal year) and a deficit of $40B this year, Minister Freeland boasted a strong economy with decreasing inflation and growing job creation.
Recent public opinion polls indicate that most Canadians feel the government is falling behind on responding to the housing crisis. In an attempt to demonstrate the government is taking action, Minister Freeland laid out an extra $20.8B over the next six years to spur more housing supply construction. The Liberals are looking at this as a “meet the moment” and doing what Canadians need to find and afford a home.
Separately, Minister Freeland responded to business frustration around the lack of details surrounding the Investment Tax Credits (ITC) announced in Budget 2023. These ITCS were a response to the US’ Inflation Reduction Act attempt to lure investment into American green transition projects such as clean technology adoption and CCUS. The FES lays out the rollout of the ITCs beginning with legislative implementation of CCUS and clean technology with rest in 2024. While not meeting the urgency business seeks, Minister Freeland is attempting to alleviate the uncertainty for business investment planning purposes.
Compared to recent Fall Economic Statements, 2023’s version is comparatively focused on demonstrating the government has a focus on addressing the problems most acutely impacting Canadians, with a focus on the key electorates in Ontario and the urban centres across Canada they most rely on for support.
Minister Freeland will table legislation later this week to implement the new measures announced in the FES and key items from Budget 2023.
Reaction from the Official Opposition
Conservative leader Pierre Poilievre was quick to point out that the FES did not offer any reduction or elimination of the carbon tax and criticized the government’s new spending and growing deficit. He also used the opportunity to tout his party’s policies on clean energy and housing in a campaign-style speech in the House of Commons.
Link to FES 2023 Document [LINK]
Link to FES 2023 News Release [LINK]
Link to FES 2023 Backgrounders [LINK]
Link to FES 2023 Speech [LINK]