Highlights from the Federal Fall Economic Statement

Deputy Prime Minister and Finance Minister Chrystia Freeland released the federal government’s long awaited fiscal update. Titled “Supporting Canadians and Fighting COVID-19”, the update aims to support Canadian families and businesses in the second wave of COVID-19 with over $100 billion in new spending over the next three years.

In July, the Liberals delivered a fiscal snapshot that estimated a $343.2 billion deficit. That number has now reached a new landmark of $381.6 billion.

The update follows on the heels of the Speech from the Throne, which was previously delivered in September and made commitments to seniors, long-term care, home care, pharmacare, and a rare-disease strategy. While the throne speech offered hints to the government’s priorities, the Fall Economic Statement has provided more detail than what was initially anticipated, going so far as to propose new spending for the remainder of this fiscal year. This means, however, that the government will need to pass a new spending bill in a minority parliament before any funding can flow to the commitments announced today. 

Building on health care commitments in the Throne Speech

Safeguarding the long-term care sector

In September’s throne speech, the government committed to work with the provinces and territories to set new, national standards for long-term care. Today’s update lays the groundwork for this commitment including:

  • Up to $1 billion for a Safe Long-Term Care Fund, to help provinces and territories protect people in long-term care and support infection prevention and control.

  • $6.4 million over two years, starting in 2020-21, to the Canadian Foundation for Health Improvement to expand its LTC+ initiative, which allows long-term care facilities and seniors residences to register via an online portal and submit a self-assessment, making them eligible for coaching and seed funding to help address gaps.

  • $1 million to engage with third parties to help identify resources to conduct readiness assessments in long-term care facilities and facilitate training on infection prevention and control.

  • $2.4 million over three years to expand Health Canada’s capacity to support these new initiatives and undertake policy work related to commitments made in the Speech from the Throne.

Pharmacare remains status quo

The Throne Speech emphasized the Liberal Government’s commitment to pharmacare, accelerating steps to create a national universal pharmacare program through rare-disease strategy. This fiscal update provides little insight into the government’s pharmacare plans, and instead reiterated its commitments already made in the throne speech to develop a new Canadian Drug Agency, a national formulary, and a national strategy for high-cost drugs for rare diseases, with funding of $500 million per year, ongoing, starting in 2022-23.

High-cost drugs for rare diseases strategy shows some progress 

The only new pharmacare-related update is that the government intends to immediately proceed with laying out a national strategy for high-cost drugs and rare diseases. Health Canada will soon be “setting out options for this strategy and will engage with provinces, territories, patients, industry and other interested groups to confirm the path forward.”

Prioritizing vulnerable populations

In light of government findings that COVID-19 has disproportionately affected Canadians with disabilities, the government brought forth the Disability Inclusion Plan which included a new Canadian Disability Benefit modelled after the Guaranteed Income Supplement for seniors, a robust employment strategy for Canadians with disabilities, and a better process to determine eligibility for government disability programs and benefits.

This fiscal update echoes the throne speech’s commitments with $274.2 million in new investments for skills and training programs targeted for those hardest hit by the pandemic, including marginalized and racialized women, Indigenous Peoples, persons with disabilities and recent newcomers to Canada.

Mental health and virtual care

Acknowledging the value of virtual care and the impact of the pandemic on Canadians’ mental health, the government previously invested $500 million through the Safe Restart Agreement to address immediate needs and gaps in the support and protection of people experiencing challenges related to mental health, substance use or homelessness. The government also launched a free online portal, Wellness Together Canada.

The government plans to build upon its Wellness Together Canada initiative in addition to other mental health and addictions priorities including:

  • $93 million in 2020-21, including $50 million to bolster distress centres and $43 million to provide further support for the Wellness Together Canada portal and the resources it offers.

  • $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.

Supporting the Canadian Red Cross

Acknowledging its role in surge capacity and potential vaccine deployment, the government will make $35 million available to the Canadian Red Cross in 2020-21. Starting in 2021-22, $150 million will also support the Canadian Red Cross and other non-governmental organizations over two years in building and maintaining a humanitarian workforce to provide surge capacity in response to COVID-19 outbreaks and other large-scale emergencies.

Supporting Canadians and businesses

Extended benefits 

With the second wave of COVID-19 leaving its mark across the country, the government has committed to a number of extended and new benefits to ideally provide certainty and stability over the coming months. These commitments include:

  • Increasing the Canada Emergency Wage Subsidy maximum rate to 75% for the period beginning December 20, 2020 and to extend this rate until March 13, 2021.

  • Extending the current subsidy rates of the Canada Emergency Rent Subsidy for an additional three periods. This means a base subsidy rate of up to 65% will be available on eligible expenses until March 13, 2021.

Direct financial support to impacted sectors

The government has committed to create the Highly Affected Sectors Credit Availability Program (HASCAP) – a new program for the hardest hit businesses, including those in sectors, like tourism and hospitality, hotels, arts and entertainment.

What is missing?

While the Government of Canada does intend to make a multi-year commitment to replenish and supply the Canadian personal protective equipment stockpile, public health investments and modernization continue to be absent from the go-forward plan.

Additionally, vaccine deployment has been top of mind globally as we head into the new year. Today’s fiscal update highlights the government’s “Team Canada approach” to work with partners including the Canadian Armed Forces and the Public Health Agency of Canada, but few details are offered with respect to how Canadians will be able to access a COVID-19 vaccine, and when.

As noted above, pharmacare again does make it into the government’s plan, but the Federal Liberal’s appear to be at a loss on how to proceed. The fiscal update duplicates what was already said in the throne speech, with no detail on what the government means by pharmacare and how they will get there.

Lastly, it was only weeks ago that the Federal Liberal’s indicated that they wanted to meet with provinces and territories on the health transfer in December. Given this dynamic, we would have expected to see more details on what the government wished to propose to provincial and territorial governments. Instead, the economic update reminds Canadians of the existing health transfer agreements and significant amount of additional funding provided to provinces and territories in 2020-21.

What can we expect next?

Due to the evolving nature of COVID-19, the government did not put forward a traditional budget plan this year. They have, however, committed to a full federal budget process for 2021-22. In fact, internal government budget planning processes have no-doubt already commenced for 2021-22 and the government will likely launch an online consultation process for proposals and priorities in the coming weeks, in the lead up to a Spring 2021 Federal Budget.

The critical period for bringing your proposals forward to government is between now and the new year. Speak to Santis about preparing your budget submission and the best strategy to approach the government.

It is also clear that the government is committing a significant amount of funding for stimulus projects. Over the coming months, the government will consult and develop a more detailed stimulus plan that could see up to $100 billion in stimulus projects over the next three fiscal years, beginning in 2022.

The governing Liberal’s need the support of one other party to pass its spending plans. If the government intends for any of the funding announced today to flow in this fiscal year, the government is required to put forward a spending bill that would face a confidence vote in Parliament. Further, the government’s planned Federal Budget in Spring 2021 will also be a matter of confidence. If the government loses either of these votes, Canada will be faced with an immediate election.

Much remains unclear with respect to a Spring Budget in 2021, vaccine procurement the provincial governments’ varied approaches to tackling the pandemic. Will 2021 move the yard stick forward on the federal government’s priorities, or will COVID-19 vaccine deployment and additional waves consume Canada for another year? Join Santis Health’s political and health policy experts for a year-in-review webinar on Friday, December 11 as we dive into what to expect for 2021.

Additional reading

Read the news release here.

Read the Fall Economic Statement here.