‘Narrowly Focused and Fiscally Responsible’: Finance Minister Freeland Outlines Priorities for 2023 Budget

Deputy Prime Minister and Finance Minister Chrystia Freeland rises during question period in the House of Commons on Parliament Hill in Ottawa on Feb. 13, 2023. The Canadian Press/Patrick Doyle

Finance Minister Chrystia Freeland said the federal government plans to make “two significant and necessary investments” in the next budget, namely in health care and in building a green economy, while promising to be “narrowly focused and fiscally responsible” to fight inflation.

“The truth is, we can’t fully compensate every single Canadian for all of the effects of inflation or for elevated interest rates. To do so would only make inflation worse and force [interest] rates higher, for longer,” the deputy prime minister said during a press conference on March 20.

Speaking in Oshawa, Ontario, Freeland said Canadians want inflation to come down, which is why the federal government’s primary goal in the upcoming budget, set to be released on March 28, is “not to pour fuel on the fire of inflation.”

Freeland said Canada had made a “remarkable recovery” from the COVID-19 pandemic, highlighting how the country delivered the strongest economic growth in the G7 in 2022. She also said there are 830,000 more Canadians working today than when the pandemic first hit, meaning the country recovered 126 percent of the jobs lost to COVID, compared to just 112 percent in the United States.

Freeland also said Canada has strong financial institutions that have the capital necessary to weather periods of economic turbulence.

“A hallmark of our Canadian banks is prudent risk management, and this is also a core principle for those of us who regulate the financial system,” she said. “Canadians can and should be confident that at a time of global uncertainty, there is no better place to be than Canada.”

However, Freeland acknowledged that inflation, which was at 5.9 percent in January, is “still too high.” She said the central bank’s decision to raise interest rates to combat inflation has led to more economic pain for many Canadians, who have seen higher mortgage payments and more expensive lines of credit.

Freeland said the government will deliver more “targeted inflation relief” in the next budget, but warned that lower government revenues resulting from slowed economic growth mean “our ability to spend is not infinite.”

“Canada has the lowest deficit and the lowest debt-to-GDP ratio in the G7, and a triple-A credit rating. Our country has a proud tradition of fiscal responsibility and we’re determined to maintain it,” she said.

‘Economic Transformation’

Freeland confirmed that the upcoming budget will include $198 billion in health-care funding over the next 10 years, an offer that was recently accepted by all provinces and territories, which includes a $2 billion one-time top-up to the Canada Health Transfer to help ease urgent pressures being faced by pediatric hospitals, emergency rooms, and surgical centres across the country.

She also mentioned there will be investments in child care, housing, skills, and immigration in the upcoming budget, saying that “these are not just social policies. They’re economic policies too.”

Freeland said that once Canada has “wrestled inflation to the ground,” it must navigate through two shifts in the global economy. The first, she said, is the focus on building “clean economies” and the shift toward net-zero emission in the industry, which she said is “the most significant economic transformation since the Industrial Revolution. And the second is Russia’s invasion of Ukraine and the subsequent move away from ”economic reliance on dictatorships,” she said.

“Together, these two fundamental shifts represent a huge economic opportunity for all of us,” Freeland said. “Canada will either capitalize on this historical moment on this historic opportunity which is before us, or will be left behind as the world’s democracies build the green economy of the 21st century.”

Seemingly making a reference to Conservative Leader Pierre Poilievre, Freeland said there are other politicians advocating for a “different, more reckless approach to fiscal policy.”

On March 12, Poilievre demanded lower taxes, a cap on spending, and more investments in housing in the next budget.

“The people who do the nation’s work are punished more and more each day in this country,” Poilievre said.

Freeland said that approach to policy is “for sweeping unfunded tax cuts for the wealthy, for a dismantling of the guardrails that make Canada a reliable place to do business, for cuts to the EI and the pensions that Canadians have been contributing to for their entire lives.”

The Canadian Press contributed to this report.