With the Trudeau Liberals plummeting in the polls and the economy stalled, the stakes could not be higher for this year’s Fall Economic Statement (FES). The government is in desperate need of a channel changer.

Housing shortages, interest rate increases, and lingering inflation have plagued Canadians since Budget 2023 – and the opposition Conservatives have capitalized on these concerns.   

Finance Minister Chrystia Freeland used the limited fiscal room available to the government to announce new measures on affordable housing, mortgage renewals, and short-term rentals designed to ease the housing pinch, while also advancing the government’s climate change agenda. 

Fiscal and Economic Topline  

Despite the country’s poor economic circumstances, the FES presents an economic forecast that casts our economy in a favourable light internationally – while shining a light at the end of the recessionary tunnel.

  • Canada is projected to lead GDP growth and have the lowest net debt (combined federal/provincial/municipal/public pension debt) as a percentage of GDP among the G7.  
  • We are also on track for the fastest post-pandemic job recovery in the G7. 
  • The Canadian economy is now expected to avoid a recession. Private sector economists expect real GDP growth to be 1.1 per cent in 2023—up from the 0.3 per cent projected in Budget 2023. Growth of 0.4 per cent is expected for 2024, compared to the 1.5 per cent projected in Budget 2023, with growth projected to rebound to 2.2 per cent in 2025. 
  • Deficit of $40 billion in 2023-24, declining to $18.4 billion in 2028-29, with a declining debt-to-GDP ratio over the same period, which is the government’s new “fiscal anchor” in the post-pandemic environment. 
  • $20 billion in new spending over six years, including $2.7 billion this year, peaking at $4.2 billion in 2025-26. 
  • Private sector economists expect CPI inflation to remain at or above 3 per cent through the first quarter of 2024. Inflation is expected to fall below 3 per cent in the second quarter of 2024, reaching 2 per cent by the end of 2024. 
  • Economists expect no further interest rate hikes from the Bank of Canada. The first full rate cut is expected in the second quarter of 2024, with the policy rate gradually declining to 3.75 per cent by the fourth quarter of 2024 and to an average of 2.9 per cent in 2025. 


The FES was tabled just eight hours shy of another significant date on the parliamentary calendar: National Housing Day. For the last eight years of this Liberal government, the date passed with barely a mention, but there’s no prospect of housing being unrecognized anymore.  

  • The new big-ticket item in the FES is $15 billion in 10-year low-interest loans to build more than 30,000 more rental housing units across Canada, with the money going to the Canada Mortgage Housing Corporation. This money will be used to push builders ahead in projects that have stalled, in the hopes of increasing the program’s total contribution to over 101,000 new homes supported by 2031-32.  
  • Another lever in the FES to address the housing crisis targets short-term rentals such as AirBnb and VRBO, in order to expand the long-term rental supply in the country. The federal government will be changing the investment equation for property owners by no longer allowing owners to claim income tax deductions on rental expenses for short stay properties in regions where short-term rental restrictions are in place. To underline the policy, the government is providing $50 million over three years, starting in 2024-25, to support municipal enforcement of restrictions on short-term rentals. This comes after new provincial restrictions in British Columbia have come into effect, effectively banning short term rentals throughout major cities in the province.  
  • The FES also addresses fraud and money laundering risks in the real estate sector by “extending requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) to title insurers and by requiring real estate representatives to identify unrepresented parties and third parties in real estate transactions.” 

Additional housing measures include:

  • Establishment of a Department of Housing, Infrastructure and Communities 
  • An additional $1 billion over three years, starting in 2025-26, for the Affordable Housing Fund, to support non-profit, co-op, and public housing providers, and $309.3 million in new funding for the Co-operative Housing Development Program 
  • Removing the GST from New Co-op Rental Housing. The measure is not intended to apply to co-operative housing corporations where occupants have an ownership or equity interest.  
  • Clarification on the previously announced GST rebate on purpose built rentals. The removal of GST will not apply to substantial renovations of existing residential complexes (e.g. new supply only) 
  • Increasing internal labour mobility of skilled workers by reducing regulatory barriers. 
  • Introducing the Canadian Mortgage Charter:
    • Allowing temporary extensions of the amortization period for mortgage holders at risk
    • Waiving fees and costs that would have otherwise been charged for relief measures 
    • Waiving the Stress Test requirement on insured mortgages when switching lenders at mortgage renewal
    • Contacting homeowners four to six months in advance of their mortgage renewal to inform them of their renewal options 
    • Giving homeowners at risk the ability to make lump sum payments to avoid negative amortization or sell their principal residence without any prepayment penalties 
    • Not charging interest on interest in the event that mortgage relief measures result in a temporary period of negative amortization  

Climate Change 

The FES includes timelines for the establishment of previously announced Clean Economy Investment Tax Credits (ITCs), starting with the Carbon Capture, Utilization and Storage ITC, and followed by the Clean Technology and Clean Hydrogen ITCs.  This puts spending for most of these initiatives into future years when the economy is expected to improve.  

Notably, the ITC regime for clean technology, originally announced in Budget 2023, has been expanded to support the use of biomass waste in the generation of heat and electricity, at a cost of over $2 billion between now and 2035. 

To ensure that the investment flows generate more Canadian jobs, the FES will put in place labour provisions that will be tied to most of the investment tax credits (ITCs). Investors will be required to pay workers the prevailing union wage and provide apprenticeship opportunities in order to collect the maximum subsidy. 

Additional details on the Government’s approach to Contracts for Difference (CCfDs), a key financial tool in the net-zero transition, were released. The Canada Growth Fund will allocate, on a priority basis, up to $7 billion of its current $15 billion in capital to issue all forms of contracts for difference and offtake agreements. 


The government has moved forward with their controversial plan to exempt home heating oil from the carbon price until after 2025. Contrary to media coverage of the announcement, most homes that heat with oil are in Quebec (465,000), followed by Ontario (267,000) and the Atlantic Provinces (287,000). 

  • The federal government has proposed to allocate $500 million over four years, starting in 2023-24, to enhance the Oil to Heat Pump Affordability program 
  • Under the enhanced program, in provinces and territories that partner with the federal government to provide support for heat pump installation, eligible households could receive up to $15,000 in federal grants, plus additional support from provinces and territories 
  • Additionally, a $250 payment will be available as an incentive for these households to make the switch. 

The government is proposing amendments to the Competition Act in order to:

  • Strengthen the tools and powers available to the Competition Bureau to enable it to crack down on abuses of dominance by bigger companies, such as predatory pricing; 
  • Further modernize merger reviews, including by empowering the Competition Bureau to better detect and address “killer acquisitions” and other anti-competitive mergers; 
  • Enhance protections for consumers, workers, and the environment, including by prohibiting misleading “greenwashing” claims and improving the focus on worker impacts in competition analysis; 
  • In support of Canadians’ right to repair, the federal government will also amend the Competition Act in order to prevent manufacturers from refusing to provide the means of repair of devices and products in an anti-competitive manner. 

The government is further cracking down on “junk fees” by: 

  • Working with the Canadian Transportation Agency to amend the Air Passenger Protection Regulations to ensure that airlines seat all children under the age of 14 next to their accompanying adult at no extra cost. 
  • The Canadian Radio-television and Telecommunications Commission will conduct a prompt investigation of international mobile roaming charges and will provide an update and concrete next steps in 2024. 
  • Providing an update by Budget 2024 on the steps that it is taking to reduce the non-sufficient funds fees charged by banks. These fees, which can currently be as high as $50, disproportionately impact low-income Canadians or those who may not have access to overdraft protection due to their credit history. 

Banking and Financial Services 

The new Ombudsman for Banking Services and Investments (OBSI) will be instituted “as the single external complaints body for Canada’s banking sector. An independent and transparent not-for-profit organization, OBSI will have jurisdiction to resolve complaints at all Canadian banks starting November 1, 2024. 

The 2023 Fall Economic Statement announces that the federal government will introduce legislation through Budget 2024 to establish a consumer-driven banking framework that would regulate access to financial data. This framework will ensure that Canadians and small businesses have “safe and secure access to financial services and products that help them manage and improve their finances.”

The Financial Consumer Agency of Canada (FCAC) will work with banks to improve the features of low- and no-cost accounts to “reflect the realities of modern banking, such as providing additional debit transactions, online bill payments, and e-transfers with no extra fees.” 

Social Policy 

To support the mental health of Canadians, the government is proposing to exempt professional services rendered by psychotherapists and counselling therapists from the GST/HST. 

The government is proposing to introduce a new 15-week shareable EI adoption benefit, at an estimated cost of $48.1 million over six years, starting in 2023-24, and $12.6 million ongoing. The benefit is expected to provide approximately 1,700 Canadian families each year with additional time and flexibility as they welcome a new child in their home. Surrogate parents will also be eligible for this benefit. 

In response to this year’s specific and atypical economic circumstances, the FES proposes up to four additional weeks of EI regular benefits to eligible seasonal workers in 13 economic regions. 

Supporting the News Media Ecosystem

A significant measure in the FES that will contribute greatly to keeping the lights on in the newsrooms across the country is the Canadian journalism labour tax credit. For the labour costs incurred on or after January 1, 2023, the federal government “proposes to increase the yearly limit… that can be claimed per eligible employee from $55,000 to $85,000, and temporarily increase the tax credit rate from 25 per cent to 35 per cent for a period of four years.” This measure is estimated to cost an estimated $129 million over five years, starting in 2024-25, with $10 million per year ongoing. However, it should ensure that many media outlets, in smaller, beleaguered markets, can afford to keep local reporters on the job. 

Other Notable Items

  • The government will advance development of an Indigenous Loan Guarantee Program to help facilitate Indigenous equity ownership in major projects in the natural resource sector. Next steps will be announced in Budget 2024. 
  • The federal government will work collaboratively with Canadian pension funds to create an environment that encourages and identifies more opportunities for investments in Canada by pension funds and by other responsible investment pools. To enable pension funds to more fully participate in Canada’s economic growth, the 2023 Fall Economic Statement also announces that the government will explore removing the “30 per cent rule” from investments in Canada. The 30 per cent rule restricts Canadian pension funds from holding more than 30 per cent of the voting shares of most corporations. 
  • The government also proposes to require large federally-regulated pension plans to disclose the distribution of their investments, both by jurisdiction and asset-type per jurisdiction, to the Office of the Superintendent of Financial Institutions (OSFI). This information will be made publicly available, and the government will engage with provinces and territories to discuss similar disclosures by Canada’s largest pension plans in a simple and uniform format. 
  • One contentious issue for the tech sector is the government’s stated intention to “move ahead with legislation to implement the Pillar Two global minimum tax in Canada, which would ensure that large multinational corporations are subject to a minimum effective tax rate of 15 percent on their profits wherever they do business.” The FES also mentions that “Canada has worked diligently and constructively to negotiate a multilateral treaty to implement Pillar One, which would ensure that the largest and most profitable global corporations, including large digital corporations, pay their fair share of tax in the jurisdictions where their users and customers are located.” The Canadian Chamber of Commerce, just prior to the formal tabling of the FES, already registered their concern over this stance with a letter to Chrystia Freeland they shared online. 

Opposition Response  

NDP leader Jagmeet Singh’s key message following the FES release emphasized the urgent need to address the housing shortage – when many of the measures announced today won’t be felt by Canadians for years. This comes at a critical moment in the Liberal-NDP Confidence and Supply Agreement (CASA), with both parties unlikely to agree on the terms of pharmacare legislation, expected to be tabled next month. With both the Liberals and NDP hoping to avoid an imminent election, the prospects for a renegotiated CASA grow by the day to ensure the passage of budget 2024. 

Official Opposition Leader Pierre Poilievre showed no quarter, immediately blasting the Liberals for producing another “inflationary budget,” and that the lack of fiscal restraint will only continue to worsen issues for Canadians. Poilievre said in a press conference following the FES release that “Common sense Conservatives will vote no confidence on this disgusting scheme. After eight years of this prime minister, he is not worth the cost. And today he’s adding another $20 billion to inflation, which will put pressure on interest rates.” The Conservatives have vowed to vote against the FES implementation bill in the coming weeks. 


The government will use the FES to reset their economic narrative. While it is unlikely that the FES released today will cause major shifts in the polls for the declining Liberals, it does show that the Liberals are responsive to the immediate needs of Canadians, while also intent on formulating long-term housing solutions. 

Trudeau’s Liberals have seen their political capital diminish precipitously over a long, angry fall where an operational mode of perpetual crisis management – on multiple fronts – has shown no signs of abating.  

However, it is also unlikely that, as the finer points of the FES are debated in the House, there will be any poison pills which will emerge to jeopardize the Confidence and Supply Agreement. 

This means that, at minimum, Justin Trudeau can set his sights on a federal election held under better economic circumstances, which he can only hope will undercut the critique being levelled at him by Pierre Poilievre.