Today, Minister of Finance Chrystia Freeland released the Fall Economic Statement, updating Canadians on the state of federal finances and introducing new measures designed to combat the pandemic and provide economic supports for individuals and firms. This is the first financial picture Canadians have had since the budget in April 2021 and the fall federal election.  The document forecasts that the deficit in 2021-22 will drop to $144.5 billion from the $154.7 billion estimated in the spring budget. The debt-to-GDP ratio is expected to peak at 48 per cent in 2021-22 before dropping over the next two years. The government predicts that GDP growth will return to pre-pandemic levels by the first quarter of 2022.  The economic statement largely reflects the themes brought forth by the Liberal election platform and the government’s Speech from the Throne, including affordability, recovery, inflation, labour measures relating to COVID-19, climate and Indigenous reconciliation.    While there were some significant new announcements made in today’s Economic Update, the update included many previously announced commitments as well.  New Announcements Relevant to Credit Unions   New programs announced today of relevance to credit unions include: 

• The extension of the Highly Affected Sectors Credit Availability Program to March 31, 2022. This program was set to expire on December 31, 2021.  
• $742.4 million for one-time payments to GIS and Allowance recipients who received CERB or the Canada Recovery Benefit in 2020.  
• $67.9 million to students who received, but were ineligible for, the CERB but were eligible for the Canada Emergency Student Benefit (CESB) by allowing their CERB-related debt to be offset by the amount they would have received from CESB.  
• Extend, for the 2021 and 2022 tax years, the simplified rules for deducting home office expenses and increase the temporary flat rate to $500 annually. 
• A Small Business Air Quality Improvement Tax Credit of 25 per cent on eligible air quality improvement expenses incurred by small businesses for ventilation and air filtration. Businesses would receive the credit on eligible expenses incurred between September 1, 2021, and December 31, 2022, related to the purchase or upgrade of mechanical heating, ventilation and air conditioning (HVAC) systems and the purchase of standalone devices designed to filter air using high efficiency particulate air (HEPA) filters, up to a maximum of $10,000 per location and $50,000 in total.  While the eligibility requirements have not yet been announced, it is possible smaller credit unions may qualify for this measure.

Previously Announced Measures Relevant to Credit Unions  These measures are in addition to previously announced measures underscored in today’s economic update which include:  

• On November 26, 2021, the government introduced Bill C-3 to amend the Canada Labour Code to provide 10 days of paid sick leave per year to workers in the federally regulated private sector. The government will consult with federally regulated employers and workers on implementation of this legislation. 
• The government will also convene provinces, territories, and other interested stakeholders to develop a national action plan to legislate paid sick leave across the country, while respecting provincial-territorial jurisdiction and clearly recognizing the unique needs of small business owners. 
• On December 7, 2021, the government announced that it will propose regulations, under the Canada Labour Code, to make vaccination mandatory in federally regulated workplaces. The government will consult with stakeholders, on the new regulations which would come into force early in 2022. The regulations are expected to be published in the next two weeks. 

Broader Economic Outlook  Though the government noted that supply-chain bottlenecks and high housing prices continue to threaten Canada’s economic recovery from the pandemic, today’s statement predicts that GDP growth will return to pre-pandemic levels by the first quarter of 2022. Fewer businesses went bankrupt last year than in 2019, the year before the pandemic. Freeland attributes this to underlying economic strength and to federal support measures in place since early 2020. Household employment income is now 7 per cent above its pre-crisis level and Canadians have reduced their household debt as the pandemic has increased savings and reduced household spending in many areas. Although employment levels have exceeded pre-pandemic levels, many Canadians have been unemployed for longer than six months, and 155,000 Canadians continue to work reduced hours.  Ottawa has promised to accept more immigrants and to take other measures to relieve labour shortages. On housing, the government believes prices, which have surged because of high demand and low supply, will begin to normalize as the pandemic subsides and more homes are built. Anticipated higher interest rates in 2022 and beyond could also take the edge off strong house price inflation seen in recent years. CCUA will continue its regular engagement with Freeland, her team at Finance, and relevant MPs and Ministers to push the sector’s policy priorities on tax policy and open banking ahead of the 2022 budget, expected in the coming months.