On April 19, 2021, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, delivered the 2021 Federal Budget: A Recovery Plan for Jobs, Growth, and Resilience. Millards Chartered Professional Accountants has released its annual Federal Budget Commentary in response.

Skylar Turkiewicz
Senior Accountant, CPA
Millards Chartered Professional Accountants

Skylar Turkiewicz, Senior Accountant and CPA at Millards in Brantford, says the commentary offers an overview and outline of the key points and their relevance to Canadian individuals and businesses. 

“This budget signals a transition from emergency response to recovery. Ottawa announced that it will invest more than $101 billion in new spending over the next three years including $30 billion over the next five years to build a national child-care system.”

Turkiewicz encourages Millards clients and interested individuals, organizations and companies to download and review the Millards Chartered Professional Accountants Federal Budget Commentary.

“The Federal Budget Commentary is a digest of the budget highlights we consider to be significant to our clients and the communities we serve.”

10 Things You Need About The 2021 Federal budget

#1: Lower than projected deficit for 2020-21 but higher for 2021-22

The feds lowered their deficit forecast for the 2020-21 fiscal year by nearly $30 billion due to improvements in Canada’s growth trajectory. While the numbers did improve, it’s still the largest peace-time expenditure in Canadian history. Ottawa is now anticipating a $154.7 billion shortfall in the coming fiscal year, more than $30 billion larger than forecast. Canada’s debt-to-GDP ratio is predicted to peak at 51.2 this coming fiscal year before slowly lowering to 49.2 in 2025-26. The Liberals had established a declining debt-to-GDP ratio as their fiscal anchor in their pre-pandemic budgets, but switched to so-called “fiscal guardrails” in the wake of the unprecedented spending spree as a result of Covid-19.

#2: Extended recovery benefits

Ottawa unveiled plans to extend three support programs put in place to thwart the worst of the economic pandemic shocks. The Canada Emergency Wage Subsidy, Canada Emergency Rent Subsidy and Lockdown Support will be extended. Extending those programs will cost about $12.1 billion, one of the most expensive line items of the budget overall.

#3: National childcare program

Ottawa is moving on with plans for a national child-care plan. The program is expected to cost $30 billion over the next five years, and $8.3 billion ongoing thereafter, with a plan to drive down the cost of child care to $10 per day by 2025-26. The Feds want to cut current child-care costs in half by the end of 2022.

#4: Old Age Security Increase for 75+

Honouring a campaign pledge made in 2019, the budget increases the Old Age Security benefit for Canadians aged 75 and up. Pensioners who will be 75 or older in August of 2022 will receive a one-time payment of $500 and ongoing payments by 10 per cent as of July next year. The Feds say the increase will provide a $766 boost to individual payments in the first year, and would be indexed to inflation thereafter. The measure is expected to cost $12 billion over the next five years.

#5: Long-term care funding

The feds outlined $3 billion for long-term care facilities after seniors homes proved to be among the hardest hit locations during the pandemic. While long-term care homes are under provincial jurisdiction, Ottawa said it would work with the provinces to ensure the funding helps support standards of long-term care living and bolsters permanent changes to the legislative framework surrounding those homes.

#6:  $2.5 billion for affordable housing

The federal government is pledging an additional $2.5 billion for affordable housing initiatives over the next seven years. That funding targets rapid housing initiatives in an effort to help under-homed Canadians find a living space quickly rather than being forced to wait during long construction periods.

#7: $15 minimum wage

Ottawa has announced plans to raise the minimum wage to $15, increasing the pay of more than 26,000 workers who currently receive less than $15 an hour. 

#8: Investing in the green economy

The feds are dedicating another $5 billion over the next seven years to achieve net-zero emissions by 2050. The plan involves working with “heavy emitters” to reduce their carbon footprint through investments in new technologies and incentivize lower carbon emissions.

#9: Loans for home retrofits

The Canada Mortgage and Housing Corporation will disperse $4.4 billion in interest-free loans, capped at $40,000, to homeowners looking to retrofit their homes with more efficient materials. Ottawa expects more than 200,000 Canadian households will tap into the program that include more funding for energy-conserving windows and doors and high-efficiency furnaces. 

#10: Indigenous infrastructure spending

Ottawa is dedicating $18 billion over the next five years to investments in First Nations communities including $6 billion on Indigenous infrastructure like desperately-needed water sanitation plants. There are currently 52 long-term drinking water advisories in effect in 33 communities.

Do you have questions about the Federal Budget Commentary or the 2021 Federal Budget? Millards has 7 Southern Ontario locations to serve you. Contact us today and find out more about our wide range of accounting, auditing and assurance services.