Budget 2021 is well-intentioned but government’s spending plans underscore need for strong economic growth
The 2021 federal budget includes a number of important initiatives that should contribute to job creation and recovery, the Business Council of Canada (BCC) says, but it lacks an overarching plan for long-term economic growth and competitiveness.
“There’s a lot here to like, but Canadians know there’s no free lunch,” said Goldy Hyder, the BCC’s President and Chief Executive Officer. “You can’t borrow $100 billion over three years without imposing a significant burden on future taxpayers.”
In its pre-budget advice to the government, the BCC called for “a responsible and prudent post-pandemic fiscal plan that avoids unnecessary new spending and seeks to gradually ease the burden of public debt.” Unfortunately, Budget 2021 falls short of this. Over a six-year period ending in 2025-26, the federal debt is forecast to almost double, to more than $1.4 trillion. If interest rates rise, the debt will be pushed even higher.
To be sure, the budget does seek to address several longstanding structural challenges in Canada’s economy. For example:
- The plan to increase access to affordable child care will enable more parents, in particular women, to reach their full economic potential.
- The budget offers support for a number of new training initiatives that will expand apprenticeships in construction and manufacturing while helping displaced, mid-career workers rapidly adapt and upgrade their skills for new jobs.
- The promise of $1.9 billion for the National Trade Corridors Fund will strengthen Canada’s roads, rail, and shipping routes, boosting exports and supporting high-value jobs.
The BCC is pleased that Budget 2021 recognizes the importance of the energy and resource sectors to the country’s economy and the essential role they can play in helping Canadians in the transition to a low-carbon future.
Among other initiatives, the expansion of the Net Zero Accelerator Fund and the introduction of a tax credit for carbon capture, utilization and storage will help to position Canada as a leader in developing and implementing clean technology. The budget also recognizes the need for investments in climate adaptation, including measures to support natural infrastructure.
“I give full marks to The Honourable Chrystia Freeland for doing what no man has been able to do, by bringing forward a budget that includes an ambitious national plan for affordable child care,” Mr. Hyder said.
“The key to all of these initiatives is going to be the execution. It’s critical that the government work closely with business and other stakeholders in designing and implementing new programs. We need to work together as Canadians to ensure our ability to compete in the global economy.”
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