The 2022 budget is shaping up to be an expensive one, even as Canada emerges from the worst of the pandemic and support programs are wound down
The risk of pumping more money into an already hot economy could fan inflation even further, forcing the Bank of Canada to hike rates – something voters will likely blame Ms. Freeland for.
Ms. Freeland is facing a growing sense of frustration from Bay Street and the Liberal Party’s more business-friendly wing that the current version of the government has veered too far to the left, abandoning the party’s economic credentials, which were hard-earned by balancing the books in the 1990s.
“You can’t just count costs. You must also count some version of fiscal knock-on effects because of the benefits of spending,” she said. “Some programs like early learning and child care … will more than make up for what is spent.” Ms. Freeland’s December fiscal update said the debt-to-GDP ratio would decline slightly over the next five years, reaching 44 per cent by 2026-27. The update also projected a deficit of $144.5-billion for 2021-22 and $58.4-billion for the 2022-23 fiscal year.
Ms. McLellan and former Conservative cabinet minister Lisa Raitt are currently leading a coalition of business and society groups urging Ottawa to put economic growth and fiscal discipline at the forefront. “I could only imagine how challenging that already difficult situation would be when you add in all these other externalities,” he said.
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