April 19, 2021

Federal Budget Designed to Finish Canada's Pandemic Fight and Heal “Economic Wounds”

More than $26 billion for infrastructure-related items

The federal budget will use $100 billion in new spending over the next three years to support Canadians hard hit by the social and economic devastation caused by the pandemic and make investments in critical areas such as infrastructure for a “dynamic, growing country.”

“This budget is about finishing the fight against COVID,” said Finance Minister Chrystia Freeland as she tabled the 2021-2022 federal budget today, the first the government has issued since 2019.

“It’s about healing the economic wounds left by the COVID recession. And it's about creating more jobs and prosperity for Canadians in the days — and decades — to come.”

The budget predicts deficits of $354.2 billion in 2020-21, which is lower than expected, and $154.7 billion in 2021-22. The Canadian Press reported that the federal debt is now more than $1 trillion for the first time ever. In addition, Canada’s GDP grew by almost 10 per cent in the fourth quarter of last year, Freeland noted.

To help Canadians recover from the pandemic, the budget proposes to keep the Canada Recovery Benefit in place through September 25. The wage subsidy, rent subsidy and Lockdown Support for businesses and other employers will also remain in place until September 25, for an estimated total of $12.1 billion in additional support.

The budget also introduces a $15 an hour federal minimum wage and commits $30 billion over five years to build an early learning and child-care system across the country with the goal of eventually costing parents about $10 a day. Freeland described the child-care investment as “social infrastructure that will drive jobs and growth.”

In total, the budget includes more than $26 billion over six years for items such as public transit, infrastructure in Indigenous communities and affordable housing. “Infrastructure is what keeps people moving and what keeps our economy growing . . . These projects will create good middle-class jobs from coast to coast to coast,” the government said in a news release.

Infrastructure Highlights:

Indigenous Infrastructure

Budget 2021 proposes distinctions-based investments of $6 billion over five years, with $388.9 million ongoing, to support infrastructure in Indigenous communities, including:

  • $4.3 billion over four years for the Indigenous Community Infrastructure Fund, a distinctions-based fund to support immediate demands, as prioritized by Indigenous partners, with shovel-ready infrastructure projects;
  • $1.7 billion over five years with $388.9 million ongoing, to cover the operations and maintenance costs of community infrastructure in First Nations communities on reserve. Indigenous communities will also have access to: $109 million over five years to repair, renovate, and replace policing facilities in First Nation and Inuit communities;
  • $40.4 million over three years to support feasibility and planning of hydroelectricity and grid interconnection projects in the North. This funding could advance projects, such as the Atlin Hydro Expansion Project in Yukon and the Kivalliq Hydro-Fibre Link Project in Nunavut; and
  • $36 million over three years to help build capacity and create jobs in Indigenous communities through clean energy projects.

The government will also invest $12 million to renew the Standards to Support Resilience in Infrastructure Program, so that the Standards Council of Canada can continue updating standards and guidance in priority areas such as flood mapping and building in the North.

Indigenous Capital

The government intends to amend legislation and regulations to expand the types of revenues First Nations may use to support borrowing from the First Nations Finance Authority, specifically to include revenues from the First Nations Goods and Services Tax and the First Nations Sales Tax.  

Skilled Trades

  • $470 million over three years to Employment and Social Development Canada to establish a new Apprenticeship Service. The Apprenticeship Service would help 55,000 first-year apprentices in construction and manufacturing Red Seal trades connect with opportunities at small and medium-sized employers.

National Capital Region

  • $35 million over five years to the National Capital Commission to support the acquisition and upkeep of federal assets, green infrastructure, and spaces in the National Capital Region; and
  • The creation of two offices: One at Public Services and Procurement Canada to address the need for an additional NCR crossing, and the other within the National Capital Commission to study and plan for potential interprovincial tramway connections between Ottawa and Gatineau.  

National Infrastructure Assessment

  • $22.6 million over four years to Infrastructure Canada to conduct Canada’s first ever National Infrastructure Assessment. The assessment would help identify needs and priorities and improve infrastructure planning.

Transit

  • In February, the government announced $14.9 billion over eight years for public transit projects across Canada. This included new permanent funding of $3 billion per year for communities, beginning in 2026-27. This funding will support new subway lines, light-rail transit and streetcars, electric buses, active transportation infrastructure, and improved rural transit.

Long-Term Care

  • $3 billion over five years, starting in 2022, to Health Canada to support provinces and territories in ensuring standards for long-term care are applied and permanent changes are made.

Affordable Housing

An additional $2.5 billion over seven years to the Canada Mortgage and Housing Corporation, including:

  • An additional $1.5 billion for the Rapid Housing Initiative to address the urgent housing needs of vulnerable Canadians. Units would be constructed within 12 months of when funding is provided. Overall, this will add a minimum of 4,500 new affordable units to Canada’s housing supply, building on the 4,700 units already funded in the 2020 Fall Economic Statement;
  • $25 million to the Northwest Territories to address housing priorities. Funding will support the construction of 30 new public housing units; and
  • $25 million to the Government of Nunavut to support the Territory's short-term housing and infrastructure needs including priority redevelopment and refurbishment projects resulting in approximately 100 new housing units.

Municipalities and First Nations

  • In March, the government tabled legislation that proposed a one-time investment of $2.2 billion to address infrastructure priorities in municipalities and First Nations communities. This funding would be delivered through the federal Gas Tax Fund and would double the federal government’s regular funding for municipalities and First Nations communities in 2020-21.

National Trade Corridors

  • $1.9 billion over four years to recapitalize the National Trade Corridors Fund. This funding could attract approximately $2.7 billion from private and other public sector partners, resulting in total investments of $4.6 billion. This would spur investments in much-needed enhancements to roads, rail and shipping routes; and
  • Of this total funding, 15 per cent would be dedicated to building and improving transportation networks in Canada’s North.

Broadband

  • Building on the $6.2 billion the federal government and federal agencies have made available for universal broadband since 2015, the budget proposes to provide an additional $1 billion over six years to the Universal Broadband Fund to support a more rapid rollout of broadband projects in collaboration with provinces and territories and other partners.

High Frequency Rail in the Toronto-Quebec City Corridor

  • In 2019, the government established a joint project office to explore VIA Rail Canada’s high frequency rail project. To continue this work, the budget proposes to provide $4.4 million to Transport Canada and VIA Rail Canada to support this work in order to advance due diligence and to de-risk the project; and
  • $491.2 million over six years to VIA Rail Canada for infrastructure investments that would support the overall success of the high frequency rail project.

Bonaventure Expressway

  • The federal government will work with the City of Montréal to redevelop the Bonaventure Expressway, including exploring the merits of divesting the federal portion of the expressway. Local ownership could provide more flexibility for the city to complete the redevelopment and revitalization of the area.  

The full federal budget documents can be accessed here.