Lower deficit and increased revenues highlight economic statement

OTTAWA—It is spring economic statement time for the federal government, the first economic update for the government of Prime Minister Mark Carney and his newly minted majority government. 

The economic update provides a snapshot of federal finances since the November federal budget—this year the tables are turned on timing, as budgets usually come out in the spring and updates in the fall.

The update shows a lower than anticipated deficit. The November budget suggested a $78.3 billion shortfall, while the actual number came in at $66.9 billion. Things were rosy because things aren’t so rosy—as surging oil prices helped pump an additional $60 billion into the kitty. In response, the update outlines $37.5 billion of spending on new measures. The government will still post an operating deficit, but projects eliminating the deficit in the cost of day-to-day operations within three years.

The last time that happened was in 2014-2015, under then Prime Minister Stephen Harper, which also saw a slight surplus that year, but slipped into deficit in 2016. Previously, Canada had seen a stream of balanced budgets from 1997 to 2008 (under Liberal prime ministers).

Prime Minister Carney is projecting deficits of well over $50 billion a year until 2031, but that spending will be on investments.

Among the investments in this statement is in skilled trades development, with an aim to recruit 80,000 to 100,000 new skilled trade workers by 2030-31. The government is spending $6 billion over five years to meet that goal. Included in the program is an apprenticeship grant of $400 per week in income top-up to apprentices completing in-class training. There will also be a one-time bonus of $5,000 for apprentices who complete their Red Seal certification. The government is also promising a first-year wage subsidy of up to $10,000 for employers who hire apprentices.

The Canada Pension Plan base rates paid by employers and employees will be lowered by incoming legislation, dropping from 9.9 percent to 9.5 percent of an employee’s paycheque. It is estimated that the contribution reduction will being annual savings for employees in the range of $133 for someone earning $70,000 a year.

In good news for travellers, the federal government is going to outsource the resolution process for air passengers to a “neutral third party.” It is hoped the 95,000 backlog of complaints will be cleared more efficiently.

The disability tax credit is getting a major revamp, reducing the paperwork required to qualify. The new proposed process is slated to reduce the amount of paperwork individuals with a formal diagnosis of one of more than 40 long-term conditions would need to fill out, the document says. Those long-term conditions include mental impairments such as Alzheimer’s, dementia and Down syndrome, as well as several physical conditions.

The government is also changing the criteria to allow podiatrists to certify eligibility for certain conditions, and also expand what physiotherapists, speech pathologists and occupational therapists can certify.

In the sports realm, the government is announcing new funding for sports facilities and programs across the country. Some $755 million is being allocated over the next five years, with roughly $118 million being promised on an annual basis afterward. A significant portion of that funding ($660 million) is geared toward sports organizations to boost youth participation. An additional $50 million is being set aside to upgrade facilities to host world-class sporting events, with the added caveat of ensuring those facilities continue to be used after those events. Another $45 million is being earmarked toward high-performance athletes. This tranche of funding will also address some of the damning findings in the Future of Sport in Canada Commission’s final report.

The government has also laid out broad plans to address fraud and financial crimes in the past year. Some of those measures that had been announced before were highlighted in the economic update. An additional measure announced is the government’s intent to ban cryptocurrency ATMs. Crypto ATMs appear like a traditional banking machine, but instead of dispensing cash from a bank account, most of these machines allow customers to deposit cash and then convert it into cryptocurrency that they can send to a virtual wallet anywhere in the world. Those “ATMs” have reportedly been a tool for fraudsters. Reports indicate that victims have lost $14.2 million to scams through crypto ATMs in 2024 (according to the Canadian Anti-Fraud Centre).

Algoma-Manitoulin-Nickel Belt MP Jim Belanger was not enamoured of the government’s update. “The Spring Economic Update from the Liberal majority government largely reiterates existing programs, with few new measures that will have a direct and measurable impact on Northern Ontario,” he said. “In a document spanning 167 pages, Northern Ontario is referenced only once. That is a notable omission.”

“The update outlines continued increases in spending but provides limited evidence that this approach will address the specific economic challenges facing our region,” continued the MP. “Canadians were promised a government that would manage public finances responsibly while delivering results. This update does not yet demonstrate that balance.”

A careful review, he said, suggests that much of the proposed spending “risks adding complexity without improving outcomes for Northern communities. This at a time when affordability and economic certainty are top of mind, programs must be both effective and accountable.”

“The government is also projected to spend $58.7 billion on interest payments in 2025–26,” said Mr. Belanger. “This is a significant and growing obligation and one that reduces the government’s ability to invest in priorities that directly benefit Canadians. Addressing this issue was a commitment made during the last election, and it remains an important test of fiscal management.”

“Northern Ontarians expect practical solutions, disciplined spending and a clear plan for economic growth,” continued Mr. Belanger, going on to allege that, “To date, the government has not demonstrated the measured approach needed to manage Canada’s finances responsibly.”

Mr. Belanger committed to continuing to review the update “carefully” and to “advocate for practical measures that reflect the realities of Northern Ontario. Our region needs targeted investment, responsible fiscal management, and a clear path to sustainable growth.”