Fall Economic Update

Yesterday, Deputy Prime Minister and Finance Minister Chrystia Freeland presented the federal government’s Fall Economic Statement. The update focused heavily on driving investments to Canada’s clean energy industries in response to recent American tax incentives in the Inflation Reduction Act.

Anchored within the context of a looming recession, the government outlined few new affordability measures. After several expensive pandemic relief programs, the Liberals appear to be practicing a measure of fiscal discipline and taking steps to reduce budget deficits.

A summary of the Statement is as follows:

Deficits & Debt:

• The budget deficit is expected to fall below the $52.8 billion deficit projected in Budget 2022, with a $36.4 billion expected deficit in 2022-23, improving to a $4.5 billion surplus in 2027-28.

• The debt to GDP ratio is now projected at 42.3% for 2022-23 and expected to fall to 37.3% in 2027-28.

Affordability Measures:

• Spending of $2.7 billion over 5 years to make Canada Student Loans and Canada Apprentice Loans permanently interest-free.

• Spending of $4 billion over six years to automatically issue advance payments of the Canada Workers Benefit. This was formerly known as the Working Income Tax Benefit for low-income workers.

• A general commitment to lowering credit card swipe fees for merchants and small businesses.

Environment, Clean Tech and Climate Measures:

• The introduction of a Canada Growth Fund, a new public investment vehicle, intended to leverage private capital to support Canada’s economic transformation and support the adoption of clean technology.

  • The Fund proposes to invest in low carbon solutions, including clean hydrogen and CCUS.

  • Further measures to address competitiveness concerns with the United States are expected in Budget 2023.

• The establishment of a refundable, clean tech investment tax credit, equal to 20-30 percent of capital costs for green technologies. Eligible investment includes solar PV technology, SMRs, low carbon heating equipment, industrial zero-emission vehicles, and more.

• The establishment of a hydrogen investment tax credit, equal to 30-40 percent of capital costs of clean hydrogen production.

  • Consultations will begin in the coming months on the level of support needed for different types of hydrogen production in Canada.

Tax Measures:

• A new 2 percent tax applied to the net value of all types of share buybacks by public corporations in Canada.

The full economic statement can be accessed here. New West will continue to monitor developments on new programs in the coming weeks. Please do not hesitate to reach out should you require more information.

-The New West Team