Finance Minister Chrystia Freeland pledged on Monday that the Liberals would provide “additional, targeted inflation relief” to vulnerable Canadians in the 2023 federal budget.
But the deputy prime minister also cautioned that Canada finds itself in a “turbulent time in the world economy” and said that the government would avoid “pouring fuel on the fire of inflation” with its fiscal policy for the year ahead.
Freeland made the comments in Oshawa, Ont., where she teed up the government’s spending plans for the 2023 budget, set to be tabled on March 28.
The finance minister spoke about the difficulties facing some Canadians amid rising interest rates and inflation that has cooled as of late but remains well above the Bank of Canada’s two per cent target.
Freeland suggested that the budget will include support for low-income Canadians, but said that the spending plans will still show Ottawa is exercising “fiscal restraint” to avoid stimulating the economy and inadvertently driving inflation higher again.
“For those Canadians who feel the bite of rising prices the most acutely, for our most vulnerable friends and neighbours, our government will deliver additional targeted inflation relief. This support will be narrowly focused and fiscally responsible,” she said.
“What Canadians want right now is for inflation to come down and for interest rates to fall, and that is one of our primary goals in this year’s budget: not to pour fuel on the fire of inflation.”
Canadian financial institutions ready for 'turbulence': Freeland
The Liberals are set to drop the second budget of their current mandate as a wave of uncertainty washes over the global financial system.
Cascading crises have swept through banks starting in the U.S. with the collapse of Silicon Valley Bank and stretching overseas to Credit Suisse in Switzerland, which is set to be sold to competitor UBS in a deal struck over the weekend. The turmoil has sent stock markets spinning over the past two weeks and put fresh scrutiny on economic forecasts and the actions of central banks in the midst of monetary policy tightening cycles.
Freeland said Monday that Canadian officials are being “vigilant” and “monitoring the situation closely” but added that Canadians should be “confident” in the country’s well-regulated banking system.
“We have strong institutions and we have a financial system that has proven its strength time and again. Our financial institutions have the capital they need to weather periods of turbulence,” she said.
Former parliamentary budget officer Kevin Page told host Mercedes Stephenson on The West Block Sunday that whether the current global problems affecting the economy are born out of Canada or not, they will be felt domestically.
“I think there’s just a sense that we’re getting close to this precipice where something is going to break,” said Page, who’s now president and CEO of the Institute of Fiscal Studies and Democracy.
Freeland said the 2023 fiscal document will include the “comprehensive health-care plan” announced by the Liberals last month.
She also spoke about two “fundamental shifts in the global economy”: the impetus to invest in green industries such as electric vehicles and the shift of world economies away from reliance on states like Russia and towards “friendshoring.”
Freeland said Canada is well-positioned to capitalize on both of these trends, given its production capacity for energy and critical minerals, for example.
“Canada produces what the world needs,” she said.
“These fundamental economic shifts represent a huge economic opportunity for Canada.”
— with files from Global News’s Sean Boynton