Canada's Finance Minister Bill Morneau

Finance Minister Bill Morneau. (Photo de Art Babych/Shutterstock)

Economy | Canada

8 things we’ve learned since the federal budget was introduced

Findings focus on government spending plans, the economy and monetary policy

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The federal budget was introduced in February, and here are eight things we’ve recently learned about government spending plans, the economy and monetary policy:

1. The Bank for International Settlements, an international financial group owned by 60 central banks, warned that Canada’s credit-to-GDP gap and debt-service ratio put the country at a higher risk for having a banking crisis.

2. The Parliamentary Budget Officer raised concerns about the federal budget not explicitly mentioning “its fiscal anchors of balancing the budget and continuing to reduce the federal debt-to-GDP ratio.” In his Nov. 12, 2015, mandate letter to Finance Minister Bill Morneau, these objectives were cited by Prime Minister Justin Trudeau as key to ensuring a “sustainable” fiscal plan.

3. If you’re like many Canadians, you think you pay too much for your cellphone plan. The CRTC announced a process to ensure Canadians will eventually be able to get a data-only cellphone plan, thereby reducing the minimum cost for a plan. 

4. The Parliamentary Budget Officer released figures on average incarceration costs for 2016-17. While a male in a minimum-security institution costs an average of $47,370 annually, which was the lowest amount, the highest was for an offender in segregation at an annual cost of $463,045.

5. Over the past decade, inflation in Canada has averaged 1.5 per cent, which is less than the Bank of Canada’s two per cent target. This has occurred against a backdrop of “rock-bottom interest rates and stimulative monetary policy,” says a report from the C.D. Howe Institute. The report suggests the reason why inflation rates haven’t been higher is because of the country’s aging population—older demographics don’t tend to accumulate debt like the younger demographics do. “Low interest rates boost household spending and therefore inflation, but by less when households are not as indebted,” notes the report.

6. A new report on federal, provincial and territorial climate change audits found that more than half of these governments don’t have targets for reducing greenhouse gas emissions. Among the federal government and provincial governments that do, only New Brunswick and Nova Scotia are set to achieve them. The report was done by provincial auditor generals across the country (excluding Quebec) and the federal auditor general.  

7. There’s more good news for cellphone users. Innovation, Science and Economic Development Canada announced a March 2019 auction of 600 MHz wireless spectrum. The move will set aside almost half of the spectrum for regional competitors and new market entrants, which should result in better quality services and lower prices for Canadians.

8. Only half of the $14.4-billion in funding allocated to the federal government’s Phase 1 of the New Infrastructure Plan has resulted in approved projects, a report by the Parliamentary Budget Officer found. The infrastructure plan was announced in the 2016 federal budget.