Some relief could be on the way for Canadians with student loans, thanks to a new measure tabled in the federal government’s fall economic statement (FES) on Thursday.
The elimination of interest on student loans is just one of the new measures outlined in the document, which contends with worrying global economic trends and aims to keep its “powder dry” with prudent spending.
“I am confident we have struck the right approach in general and in this fall economic statement,” said Finance Minister and Deputy Prime Minister Chrystia Freeland on Thursday.
“What we’re announcing today is to strike a balance between necessary compassion and support for Canadians, and fiscal responsibility.”
Here are some of the other measures the government is proposing as economies around the world brace for the continued uncertainty:
Advance payments on Canada Workers Benefit
Every year, three million of the lowest paid Canadians are eligible for the Canada Workers Benefit – a refundable tax credit that tops up their income.
However, the benefit is typically delivered through tax returns, which the government said in the FES means that Canadians “need to wait until the tax year is over to receive the support.”
Starting in 2022-23, Canadians workers who qualified for this benefit the year before will be automatically issued advance payments based on their previous tax returns – a move expected to cost around $4 billion over the next six years.
“Any additional entitlement for the year would be provided when filing their tax return for the year,” the FES detailed.
Those eligible will get “up to” $714 total for single workers, and up to $1,231 total for families, according to the document.
Eliminating interest on student loans
During the COVID-19 pandemic, the government waived interest charges on student loans for two years – but that move expires on March 31 next year.
Now, all student loans and apprentice loans in Canada will be “permanently interest-free, including those currently being repaid, beginning on April 1, 2023.”
The move comes with a price tag of $2.7 billion over five years, then $556.3 million ongoing after that – and is set to save the average student loan borrower $410 per year, according to the FES.
Sahir Khan, executive vice president of the Institute of Fiscal Studies and Democracy, said while the move overall is not a “massive” impact, it will “matter to the people that are (impacted) by these new measures.”
“This government’s not trying to tackle global inflation, but it’s trying to make life easier for those that are kind of most affected,” he suggested.
Money for Fiona relief
Hurricane Fiona devastated communities in Atlantic Canada and while recovery efforts are “still underway” and costs of the damage are still being tallied, more federal funding is coming.
The fall economic statement sets aside $1 billion in 2022-23 in anticipation of requests from provinces under the Disaster Financial Assistance programs.
The storm’s insured damage alone has been estimated at roughly $660 million. The Insurance Bureau of Canada has warned that most of the damage the storm caused was in high-risk flood areas – where insurance coverage isn’t always available.
As a result, IBC said the government is expected to be hit with the majority of the costs for the disaster.
Sustainable jobs funding
The government said in the economic statement that it plans to put fresh funds towards pivoting Canada’s economy towards more sustainable jobs in a new era marked by climate change.
The measures include investing in a Sustainable Jobs Training Centre, which would study changing skills requirements so it can train workers for a “low-carbon economy,” establishing a “sustainable jobs stream” under the Union Training and Innovation Program, and launching the Sustainable Jobs Secretariat, which would offer “up to date information” about opportunities as the government builds a “low carbon economy.”
The government plans to spend $250 million over five years on this effort. It also aims to provide $60 million over three years to support existing territorial programming.
Tax credit for green investors, jobs-targeted measures
In a bid to attract investment into Canada’s borders, the government is proposing a refundable tax credit that will be “equal to 30 per cent of the capital cost of investments,” the document said.
However, not all investment is eligible. The tax credit is reserved for companies that are investing in green electricity generation systems, stationary electricity storage systems that don’t use fossil fuels, low carbon heat equipment and zero-emission vehicles.
The success of this measure will be in the hands of investors, Khan warned.
“You’re trying to convince private investors to move their money into an area that (is) uncertain. So then the government is trying to reduce risk, but they still need to make a return,” Khan said.
“This is getting the private sector to cooperate. All the federal government can do is prime the pump, but ultimately it’s gonna be the private sector that’s going to be the engine of this growth.”
There’s also more money for the National Research Council – $962.2 million “on a cash basis” over the next eight years, with another $121.1 million per year ongoing, and money for getting young Canadians into the workforce with $802.1 million in funding targeting work placements through the Youth Employment and Skills Strategy.
New protections for truckers
The government is planning to try to crack down on employers who break the Canada Labour Code, according to its $26.3-million proposed investment in Employment and Social Development over the next five years.
The funds will be aimed at taking “stronger action” against employers that don’t comply with the Canada Labour Code, after a number of employers came under fire for misclassifying their truck drivers as independent contractors – a move that can allow employers to skirt rules about pay and benefits.
Taxing share buybacks
The government is proposing to put a new tax on share buybacks, after companies have been buying their own stock back in a bid to return value to existing shareholders.
Under the proposed rule, companies would have to pay a corporate-level two per cent tax on the net value of all types of share buybacks – a levy that would come into force on Jan. 1, 2024.
This is one of the few “big moves” in an otherwise cautious statement, Khan said.
“It really is an attempt to get companies to shift from generating additional returns for shareholders and getting that money – that otherwise might be idle – into building factories, (and) investing in R&D,” he said.
Crypto consultations kicking off
Starting on Thursday, the government announced it has launched consultations with stakeholders on digital currencies – a move that was promised in Budget 2022.
The talks will explore “cryptocurrencies, stablecoins, and central bank digital currencies” after the online funds have been used to “avoid global sanctions and fund illegal activities, both in Canada and around the world,” the FES said.
The government has pledged to eventually undertake a full financial sector legislative review on the “digitalization of money” and “maintaining financial sector stability and security.”