This afternoon, Finance Minister Chrystia Freeland delivered the government’s Fall Economic Statement (FES), the first fiscal blueprint in her new role and the first ever delivered by a woman at the federal level. Today’s mini-budget was full of new spending after foregoing a 2020 Budget this past spring. Minister Freeland presented a short-term outlook focused on two priorities:

        • Getting Canada through the pandemic; and
        • Setting the stage for Canada’s post-pandemic economic recovery.

Fiscal Framework

Fall statements give the government an opportunity to provide a mid-year course correction on the state of the nation’s finances and this year’s was no different, projecting a federal balance sheet that is drowning in even more red ink.  Here are the numbers:

        • The fall statement outlines $13.5 billion in new spending over the next 6 years.
        • Once the pandemic is over, the government plans to set aside between 3-4% of Canada’s GDP, or up to $100 billion, for a three-year stimulus package to lay the groundwork for recovery, with details in the 2021 budget.
        • Under a best case COVID-19 scenario, the deficit will be $381 billion in 2020-2021, up from $341 billion projected in the summer’s fiscal snapshot. If restrictions escalate, it will be nearly $400 billion.
        • Beyond this year, the government’s best-case deficit projections are $121 billion in 2021-22 and $50 billion in 2022-23.
        • At the end of September, the national debt was $924 billion and it is projected to be $1.4 trillion by March 2024 – a nearly 50% increase.
        • In the absence of a traditional fiscal anchor, Ottawa said it intends to use ‘several indicators’ related to the labour market such as the employment rate, hours worked, and level of unemployment, which will be used to signal when it might be time to wind down fiscal supports. The Liberals now appear to be targeting full employment before scaling back the deficit.


The fall statement targets internet giants like Netflix, Amazon and AirBnB with sales taxes and has signaled their plans to levy corporate taxes on these companies, even though they are not based in Canada, with measures to collect:

        • GST/HST from digital services from tech giants outside our country, including apps, gaming and audio & video streaming services to raise $1.2 billion over 5 years.
        • GST/HST on all sales to Canadians of goods that are located in Canadian fulfillment warehouses to raise $1.6 billion over 5 years.
        • GST/HST on all platform-based short-term rental accommodation supplied in Canada to raise $360 million over 5 years.
        • A fair share of corporate taxes for digital corporations based on their activity in Canada, increasing federal revenues by $3.4 billion over 5 years, starting in 2021-22 with further details in Budget 2021.

In addition, the government will limit employee stock option deductions for high-income individuals employed at large, long-established, mature firms. A $200,000 annual limit will now apply, but in an effort to exempt start-ups, there will be exceptions for employee stock options granted by Canadian-controlled private corporations (CCPCs) and those with annual gross revenues of $500 million or less.

Pandemic supports

While most Fall Economic Statements may contain one or two new initiatives, this was more of a mini-budget with measures touching several sectors, starting with pandemic-related supports for businesses and individuals:

        • Increase to the maximum Canada Emergency Wage Subsidy (CEWS) subsidy rate to 75% up from 60% and extend the subsidy to March 13, 2021.
        • The Canada Emergency Business Account (CEBA) will be expanded to add an additional interest-free $20,000 loan, half of which is forgivable if repaid by December 31, 2022. The deadline to apply for a CEBA loan has been extended to March 31, 2021.
        • Remove GST/HST from the purchases of face masks and face shields as long as they are required under public health orders.
        • $565.4 million to ensure that federal and provincial laboratories continue to receive sufficient testing supplies and to support the roll-out of new rapid COVID-19 tests and innovative approaches to testing.
        • Fighting the opioid crisis – $66 million over two years, starting in 2020-21, to support community-based organizations responding to substance use issues, including to help them provide frontline services in a COVID-19 context. 

Child Care and Support

The government is immediately boosting the Canada Child Benefit, with some families seeing up to $1200 per child under the age of 6 – a measure proposed by Conservative Leader Erin O’Toole in his leadership campaign.

In her speech to the House of Commons, Freeland said “Quebec can show us all the way on child care,” but stopped short of major spending, with a pledge that the 2021 budget would “make historic investments” in child care. For now, the government will spend:

        • $420 million to recruit and retain more early childhood educators;
        • $20 million over 5 years to create the Federal Secretariat on Early Learning and Child Care; and
        • $75 million for Indigenous child care.


The government is expanding the First-time homebuyer tax credit, increasing the maximum eligible amount for new buyers from 4 to 4.5 times their yearly income. They also are increasing the maximum eligible amount from $125,000 to $150,000 a year for persons living in Toronto, Vancouver and Victoria. This means that in those cities, the maximum amount eligible for the first-time homebuyer credit will be about $722,000. 


The fall statement contained little in the way of details on financial aid for airlines, stating only that the government is establishing a process with major airlines regarding financial assistance, while reiterating their goal of ensuring Canadians are refunded for cancelled flights. The government also committed up to $206 million over two years to support regional air transportation, which services harder-to-reach areas of the country. 

Tourism & Hospitality

The creation of the Highly Affected Sectors Credit Availability Program will provide 100% government backed low-interest loans to the hardest hit sectors, up to $1 million over 10 years. This will support some of the hardest hit sectors such as hospitality and tourism, hotels, arts and entertainment.

Long-Term Care

The statement includes a $1-billion pledge to establish the Safe Long-term Care Fund for helping provinces and territories shore up safeguards at those facilities, with funding conditional on those jurisdictions’ ability to provide a “detailed spending plan” that shows protective measures will be funded. 

Climate Change

While nothing is imminent, the statement mentions “Border Carbon Adjustments” for the first time, hinting that an international carbon tariff regime could be in the works. Predicated on the idea that low carbon, higher-cost producers in Canada should not be asked to compete with high carbon, low-cost imports, a carbon tariff would theoretically level the playing field. Such an agreement would likely have to wait until the United States adopted similar low-carbon policies.  In the meantime, the statement contains significant new spending on low-carbon initiatives:

        • A new, $2.7 billion dollar program to fund energy-efficient home renovations. The Home Energy Retrofit program will provide grants of up to $5000 for up to 700,000 homeowners, and 1 million free Energy Star assessments – measures that will be a boon to the construction sector and popular with homeowners.
        • $3.2B towards the 2019 commitment to plant 2 billion trees.
        • $150M over 3 years to accelerate expansion of ZEV charging stations.
        • Natural Climate Solutions for Agriculture Fund to leverage $85 million in existing programming and guided by a new Canadian Agri-Environmental Strategy

Indigenous communities

The FES commits a further $380 million in 2020-21 for the Indigenous Community Support Fund to help ensure that the needs of Indigenous communities will continue to be met during the second wave, bringing total investments towards the fund to over $1 billion since the beginning of the pandemic. In addition, $332.8 million will be provided in 2021-22 to help First Nations, Inuit and Métis communities offset declines in own-source revenues to provide the same level of core-community programs and services to their members.

Political conclusions 

Today’s mini-budget outlines the government’s   new fiscal framework, with details to be unveiled in the 2021 spring budget, raising the potential to trigger an election. The FES begins to precondition the public to the $100 billion COVID recovery plan   while foreshadowing the implementation of the Liberal’s election commitments on childcare, pharmacare and fighting climate change. Like all budgets and mini-budgets, there are clear winners and losers. Sectors like Aviation and tourism will be disappointed and likely vocal in seeking further support.

To help pay for the magnitude of this level of new spending, the government is taking on major tax battles with the taxation of internet giants and limits on employee stock option deductions.

These free-spending ways are already drawing the ire of the opposition Conservatives, who say there is no plan for the economy without a solid plan for rapid testing and vaccines and that now is no time to reimagine the economy. While the Liberals can only hope that vaccine distribution will be underway in tandem with the spring budget, they are making a clear play for NDP support to keep their government alive – or face a spring election where the liberals will position their “progressive” initiatives against Conservative calls for greater fiscal accountability. As 2020 has taught us the future is far from predictable.