The federal government tabled its Fall Economic Statement (FES) on Monday, proposing $100 billion in stimulus spending over the next three fiscal years, hoping to create one million jobs and drive an “accelerated economic recovery.”
The FES claims Canada’s economy would look a lot worse without the Liberals’ interventions since the start of the COVID-19 pandemic. The finance department estimates that without federal subsidy, credit and benefit programs, real GDP would have been 4.6 per cent lower this year and 4.4 per cent lower in 2021.
That’s part of the rationale for the government’s continued spending. “This crisis demands targeted, time-limited support to keep people and businesses afloat and to build our way out of the COVID-19 recession,” said the prepared text of a speech Finance Minister Chrystia Freeland will deliver in the House of Commons Monday afternoon. So the FES doesn’t set a new maximum deficit or debt target, instead promising that the government will start to wind down its stimulus measures based on indicators like employment levels and hours worked. This year, Ottawa will run a $381.6-billion deficit, with spending exceeding revenues by $121.2 billion next fiscal year.
For Canada’s innovators and small- and medium-sized businesses, the government unveiled some key policies, with details on changes to how stock options will be taxed, an extension of wage and rent subsidies, and another step towards a digital-services tax. Here are seven ways the economic statement will affect the innovation economy.