Mr. Speaker, colleagues in the House and Canadians, I have the honour to table, in both official languages, the economic and fiscal update 2021.
Twenty-one months ago, a global pandemic reached our shores. Few of us had any idea how long it would last or the toll it would take and, today, we are facing omicron, an even more virulent variant of this virus. However, we can be confident we will get through this, because our government did understand from the very outset that to save lives our economy would have to be locked down, so we put in place unprecedented measures to meet this unprecedented challenge.
We supported municipalities and we supported provinces and territories. We supported our health care system and we supported schools. We provided free vaccines, PPE, rapid tests and therapeutic medicines.
Our focus was on people and jobs. We helped millions of Canadians with income supports. We delivered direct payments to seniors and families.
We kept businesses going, particularly small businesses, and helped workers stay connected to their jobs, with the wage and rent subsidies and loans for small businesses. We did this because it was the right thing to do. We also did it because we knew it was an investment in our economy that would pay off.
Our goal was to prevent economic scarring. We wanted to emerge from this with our economic muscle intact, ready, as a country, to come roaring back. Keeping the Canadian economy on life support as we went into COVID-19 hibernation was expensive, but we knew that keeping Canadian families and businesses solvent would help our economy rebound.
This economic and fiscal update provides Canadians with a transparent report of our nation's finances. It also includes targeted investments that will ensure we have the weapons we need to finish the fight against COVID-19, an effort more urgent now than ever with the surge of omicron.
First, we are protecting children with pediatric vaccines, now available for free for all children five and over. Booster shots are free for all Canadians too, just as first and second doses have been.
Omicron makes boosters more urgently important now than ever. I ask people to please go and get a booster as soon as they are eligible. I have booked mine and I am very glad to have done so. We have enough boosters for everyone, and boosters are an essential defence against the mounting threat of omicron.
We are investing in new antiviral drugs for COVID-19 patients that prevent hospitalizations and will save lives. We are investing in ventilation improvements to prevent outbreaks at schools and workplaces.
To date, our government has delivered nearly 80 million rapid tests to provinces, territories and indigenous communities, free of charge. This fiscal update sets aside a further $1.7 billion, enough to procure more than 180 million additional rapid tests. Rapid tests are a useful tool in the intensifying fight against omicron. We are buying and distributing them, and we encourage Canadians to use them. We are also providing support to provinces and territories for proof of vaccination credentials. As we brace ourselves for the rising wave of omicron, we know that no one wants to endure new lockdowns. That is why vaccines, vaccine mandates, boosters, ventilation and rapid tests are so essential.
Over the past 21 months we have all learned that fast, local action to limit outbreaks is much less costly than waiting and being forced to impose wider and deeper restrictions. In that knowledge, and out of an abundance of caution, we are proposing local lockdown support for workers and businesses. These measures are an insurance policy for our country, and are in place to help local public health officials make the right decisions in the coming months, knowing their communities will have the support they need. We are also moving forward on 10 days of paid sick leave for workers in federally regulated businesses.
We are also provisioning an additional $4.5 billion to pay for possible further costs of fighting omicron and other COVID‑19 surges, including spending on border measures and on income and business supports.
The COVID pandemic triggered the steepest economic contraction in Canada since the Great Depression. At its worst, it cost three million Canadians their jobs, as our GDP shrank by 17%. This was a once-in-a-generation trauma. When it first hit, many predicted it would take years to rebuild. That is why we are so pleased to report that Canada has largely recovered from the economic damage inflicted by COVID‑19 and is poised for robust growth in the months to come. We have now surpassed our target of creating a million jobs. In fact, we have recovered 106% of the jobs lost at the peak of the pandemic, significantly outpacing the United States, where just 83% of lost jobs have been recovered so far.
From the start, we have understood that few things are more central to the economic well-being of Canadians than having a job. That is why our investments have been so singularly focused on employment and why Canada has experienced the second-fastest recovery of lost jobs in the G7.
Our GDP has already returned to near pre-pandemic levels. Our GDP growth of 5.4% in the third quarter outpaced that of the U.S., the U.K., Japan and Australia. OECD projections suggest that by 2023, Canada's recovery will be the second fastest in the G7.
This update shows that the size of the Canadian economy this year will be $2.48 trillion. When we published our economic forecast in the 2018 budget, that is almost exactly the size we expected our economy to grow to by this year, and we made that forecast when none of us had any idea that our economic growth and our lives would be so deeply disrupted by COVID‑19. We are back on track and that is good news for all Canadians.
Canada posted a $25.1-billion surplus in our trading goods in October as our exports rose. Fewer businesses went bankrupt over the past year than in 2019, before the pandemic. There are now an additional 6,000 active businesses in Canada compared with before the pandemic. Household employment income is now 7% above its precrisis level, and Canadians have used this difficult time to pay down their personal debt relative to their income.
Our recovery from the COVID‑19 recession has significantly surpassed Canada's recovery from the 2008 recession. We have already more than recovered lost jobs, a healing that took eight months longer after the much milder 2008 recession. We are on track to recover lost GDP five months more quickly than after the 2008 contraction.
Provincial government balance sheets were sheltered from the pandemic thanks to strong support from the federal government. Provincial and territorial government revenues actually increased in 2020-21 because of substantial federal support, both through direct transfers and through Canada's COVID-19 economic response.
This assistance helped put a floor under provincial and territorial government revenues thereby limiting their deficits and debt. Fully $8 out of every $10 provided to fight COVID-19 and support Canadians through the pandemic came from the federal government. Our government will continue to be agile as we navigate the highly volatile and evolving global economy and health industry.
We need to continue to manage the spread of this sneaky and unpredictable virus. The pain of the families who lost a loved one can never be measured. Our guiding principle will continue to be the conviction that the best economic policy is a strong health policy. Because we have been steadfast in putting saving lives first, this is the approach that has driven our strong economic performance and the second lowest mortality rate in the G7.
As we look ahead, we are mindful of elevated inflation and its impact on the cost of living for Canadians. We know inflation is a global phenomenon driven by the unprecedented challenge of reopening the world’s economy. Turning the world economy back on is a good deal more complicated than turning it off.
During the lockdown, Canadians' incomes remained strong, on average, but opportunities to spend on services were severely restricted. The result was that Canadians spent more on durable goods, without spending on meals in restaurants, personal care or vacations. Canadians spent their disposable income on renovations, new furniture, appliances and cars. It will take some time for supply chains to catch up and for our economy to rebalance itself.
To help unsnarl Canada's supply chains, today we are announcing $50 million to launch a call for proposals that will help Canadian ports acquire cargo storage capacity and take other measures to relieve supply chain congestion.
Our government understands that a strong monetary policy framework is the best weapon in our arsenal to keep prices stable so that Canadians can afford the cost of living. That is why yesterday we renewed the Bank of Canada's 2% inflation target to ensure that the current rate of inflation does not become entrenched.
Canada was a pioneer when we established an inflation target to guide our central bank in setting interest rates. In the 30 years since, the Bank of Canada has successfully maintained price stability in our country. Our government has every confidence the bank will continue to deliver on this essential mandate. Canadians should be wholly confident in their central bank.
Many Canadians worry about paying their bills. That is why we are glad we indexed the Canada child benefit to inflation, and are committed to continuing to index old age security, the guaranteed income supplement, the goods and services tax credit, and other benefits for the most vulnerable.
We are committing today to provide guaranteed income supplement or allowance beneficiaries who also received the Canada emergency response benefit with a one-time payment to alleviate the financial hardship they may have faced as a result of an unintended interaction between the two benefits. We are also laying out a plan to provide debt relief to students who need to repay the Canada emergency response benefits they were not eligible for by proposing to offset their debt with the Canada emergency student benefit amount for which they were eligible.
We are establishing the $60‑million Canada performing arts workers resilience fund, which will support initiatives that improve the economic, career, and working conditions of live performance arts workers, including independent contractors.
Early learning and child care costs are like a second mortgage for many young Canadian families. Child care that is too expensive or just not available keeps many mothers from going back to work, which is an unacceptable brake on our economy at a time when we are facing labour force shortages.
We knew that high-quality, $10-a-day child care would make life more affordable for Canadian families and drive economic growth. That is why our $30-billion investment in early learning and child care was the cornerstone of the April budget.
Our plan was widely supported, but many Canadians were skeptical about our ability to get the job done. I understood them. After all, Canadian women have been trying to establish a national system of early learning and child care for more than half a century and, with the exception of Quebec, we had not succeeded.
Today, I have great news for Canada's working mothers and fathers. Less than eight months after we announced our bold project in our budget, we now have child care deals with nine provinces and one territory. Within five years, Canadians will proudly rely on $10-a-day child care just as our universal, publicly accessible health care system has come to define us as a society. This is a historic accomplishment that will transform the lives of every parent in Canada and of every future parent in Canada for generations to come.
Let us give this effort a final push and conclude agreements with Ontario, the Northwest Territories and Nunavut. We can and we must get this done now.
Immigration is another important driver of economic growth and is a Canadian competitive advantage. Our government is committed to bringing in 411,000 immigrants in 2022. It will be the highest number in Canadian history. To help support this effort and reduce processing time for permanent- and temporary-resident and Canadian citizenship applications, we are investing $85 million in our immigration system.
Housing prices are a real concern, especially for middle-class Canadians hoping to buy their first homes. Housing affordability remains a priority for our government, and we will take further action in the upcoming budget. As we announced in the spring budget on January 1, 2022, our government will apply Canada's first national tax on vacant property owned by non-resident non-Canadians.
As we said we would, the government is also bringing forward legislation to extend the northern residents deduction so Canadians in the north can claim up to $1,200 in eligible travel expenses on their taxes starting next month. The government will also bring forward legislation to extend small businesses' deadline for the repayment of Canada Emergency Business Account loans, and to ensure that seasonal workers who received pandemic benefits can still qualify for the EI seasonal workers pilot project.
Climate change is causing increased volatility in the economy. Recent and tragic floods in British Columbia devastated homes, farms, and critical infrastructure, and further disrupted supply chains. Severe droughts, including across our Prairies, have contributed to increases in food prices. We are taking action to fight climate change.
Canada has a world-leading price on pollution that is helping to lower emissions and grow a cleaner economy. In fact, as many countries in the world look to up their level of ambition they are seeing inspiration in our plan. We are also working to finalize Canada’s first National Adaptation Strategy by the end of next year. The green transition of the global economy is under way. It is one of the great economic opportunities, and one of the great challenges, before us.
Our government is determined that Canadians must emerge from this international transformation even more prosperous than we are today. We will ensure that there are good sustainable jobs for Canadians in every corner of the country, for decades to come.
Above all, we know that our national focus, once we emerge from COVID-19, must be growth and competitiveness. Measures to promote them will figure prominently in the budget. Our government understood from the start of this pandemic that the best way to maintain strong public finances was to keep our economy strong. That is what our emergency spending achieved. This fall, Moody's and S&P both reaffirmed Canada's AAA credit rating.
We know that Canadians work hard to earn a living, and expect us to be careful with their money. We know we have a duty to do the right thing for today and for tomorrow. We understand that our debts must be repaid. We came into this crisis with the lowest net debt-to-GDP ratio in the G7, and in fact we have increased our relative advantage during the pandemic.
We remain committed to the fiscal anchors that we outlined in the spring budget: to reduce the federal debt-to-GDP ratio over the medium term and to unwind COVID-19-related deficits. In October, we pivoted from necessary but costly broad-based support programs to more narrowly targeted, less expensive measures, as we had promised we would. Our government will continue to be a responsible and prudent fiscal manager.
This update reports a deficit of $327.7 billion for the last fiscal year and of $144.5 billion for this fiscal year. This compares favourably with our forecast of $354.2 billion and $154.7 billion, respectively, in the April budget.
Our debt-to-GDP ratio in the last fiscal year was 47.5%. It will peak at 48% in this fiscal year and then fall steadily, as will the deficit. This contrasts positively with our prediction in the April budget.
In budget 2021, we forecast that in this fiscal year, 42% of our bond issuance would be long-term debt of 10 years or more. Today, we can forecast that it will be 45%. Members will recall that in 2019, only 15% of our debt was locked in over a long-term horizon. Pushing more of our debt into bonds with a longer maturity ensures that Canada's debt servicing costs are sustainable.
Thanks to an improving fiscal outlook, the amount of money we will need to issue and borrow into this year is $35 billion lower than forecast in budget 2021. Despite a necessary and unprecedented level of spending to support Canadians during COVID-19, our public debt charges as a share of GDP will be the same this year and next year as they were in 2018 and 2019, before the pandemic.
This fiscal update includes a provision to settle the cases on harm to first nations children currently before the Canadian Human Rights Tribunal and to invest in transforming the services offered to first nations children and their families. We have provisioned $20 billion for compensation and $20 billion to improve the system going forward.
The Government of Canada is working toward an agreement with the parties on this issue. We know that paying our historic debt to indigenous people is paramount, and that we must act to ensure that these injustices do not happen again. We will not and we cannot evade this essential commitment. That is why we are today setting aside the funds to pay for it.
It has been a hard 21 months, but we are succeeding because we are doing what Canadians do in a crisis. We are helping each other, we are working together and we are doing what needs to be done, whether it is as big as the wage subsidies or as small as wearing a mask at the grocery store.
With winter upon us and omicron now among us, we know that there will still be tempests ahead, but we are resilient. Our plan is working and once we finish the fight against COVID-19, we will turn our resolve toward fighting climate change, advancing reconciliation with indigenous people and building an economy that is stronger, fairer, more competitive and more prosperous for all Canadians.