Advocacy ALERT

Fall economic statement 2021 under-delivers on economic growth measures

Background

The Canadian Construction Association (CCA) is advocating for investment in infrastructure as the key to economic renewal and prosperity for all Canadians.  This includes investment for trade-enabling infrastructure, like the Western Canada Gateway Initiative, green and sustainable, and addressing our aging infrastructure; investing to attract and train a skilled workforce and modernizing procurement.

The Minister of Finance, Chrystia Freeland, updated Canadians on the health of the government’s finances, the state of the economy and the continuation of COVID-19 fiscal measures on December 14 during the annual fall economic statement.

The Liberals are under pressure to balance the budget and address the $144.5 billion deficit and have chosen to focus on new spending predominately in a direct response to the resurgence of cases amid the detection of the Omicron variant across the country.

Economic update:

1. Limited new policies: While the Liberals promised billions in new spending during the election, there was limited new funding announced during the statement.
2. Inflation is influencing the future spending plans for government: The Bank of Canada and the federal government have shifted their tone on inflation from transitory to persistent. With above average inflation expected to continue throughout 2022, any new spending might create further inflationary pressures in the economy, forcing the government to ease their spending plans.
3. Deficit figures were smaller than expected: The government’s revenue this year benefited from higher-than-expected oil prices, reducing the deficit from $155 billion to $144.5 billion. The debt to GDP ratio is set to peak at 148% in early 2022 due to further COVID-19 relief measures, then gradually begin reducing as the government focuses on balancing the budget over the coming years.
4. Promise to deliver substantial policy to address workforce shortage in future budgets: The federal government acknowledged the labour shortage in the update, but no substantial policy to address the situation was introduced. However, the government has committed a one-time funding of $85 million in 2022-2023 to increase immigration levels and reduce the backlogs that exists on permanent and temporary resident applications.
5. Addressing supply chain disruptions: In 2022, the government is committing $50 million for eligible projects and will launch a new call for proposals under the National Trade Corridors Fund to relieve port and supply chain congestion. Further details on the call for proposals will be released in the coming weeks.
6. Investments to adapt existing infrastructure to align with current public health needs: While the key priorities of the construction industry were not addressed in this economic statement, the federal government is committing a series of small investments to adapt existing infrastructure to meet current public health requirements. This includes $100 million to improve ventilation in schools, $70 million to improve ventilation in community buildings, and $30 million to adapt public spaces for social distancing and outdoor gatherings.

For further information:

Rodrigue Gilbert, Senior Vice-President, Public Affairs and Procurement Practices
[email protected] or (613) 236-9455, ext. 102

Louis-Philippe Champagne, Director, Government Relations and Policy
[email protected] or (613) 236-9455, ext. 123