Morning Update: Ottawa loosens fiscal restraints with new spending

Good morning,

Slower economic growth and higher public spending are straining Ottawa’s bottom line, as the Liberal government’s 2023 budget announced billions in new spending on clean technology and an expanded national dental care program.

Finance Minister Chrystia Freeland said her economic plan will position Canada to take advantage of a moment in which the United States and other democratic allies are seeking to green their economies, while reducing their supply-chain dependence on China and Russia.

After two years of rapid growth as pandemic restrictions loosened, the Canadian economy is expected to stall this year under the weight of higher interest rates. Recent turmoil in the U.S. and European banking sectors has increased the odds of a more severe downturn.

This worsening economic outlook combined with new spending means Ottawa is straying from its “fiscal anchor.” Federal government debt compared with the size of the economy is expected to rise in the coming fiscal year, before returning to a downward trend.

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Key takeaways:

• The federal government is banking on a suite of new tax credits, a clean electricity grid and the carbon tax to spur the transition to a clean economy and counter vast subsidies rolled out by the United States that risk pulling capital south of the border.
• Ottawa is establishing an office to counter foreign interference and giving nearly $50-million to the RCMP to combat harassment of Canadians by powers such as China and Russia.

Read more:

• Canada to lend another $2.4-billion to Ukraine
• No funding boost for foreign aid supporting vulnerable women and girls in budget
• Budget targets billions from banks with change to dividend tax

What does it mean for your finances?

• Grading how the federal budget will affect your personal finances
• Federal help with dentist bills costs $7.3-billion more than planned
• Federal government targets high-income earners with increased minimum tax
• Ottawa moves to lower credit card swipe fees for small businesses in 2023 budget
• Ottawa moves to strengthen air passenger rights after ‘unacceptable’ flight delays, airport chaos

Budget commentary

• Andrew Coyne: If the government wanted to strangle economic growth, this is the budget it would produce
• Campbell Clark: The heartbeat of Freeland’s budget is green tech subsidies
• Adam Radwanski: Budget 2023 makes a good, if risky, bet on letting the market drive climate investments
• Editorial: The Trudeau Liberals build a budget on a cloud, and collective amnesia

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Also on our radar

Inquiry to release report on Nova Scotia shootings: The fatal delay on the part of the RCMP is one of the central issues Nova Scotians expect to be addressed when a public inquiry into the mass shooting that began in Portapique, N.S., and claimed 22 victims releases its final report tomorrow.

Suspect in police killing was released from psychiatric facility: The suspect in Monday’s killing of a Quebec police officer is a man who had been released from a psychiatric facility, where he was treated as a result of violent incidents for which he was found not criminally responsible.

B.C. to limit cross-border sales of Ozempic: Thousands of United States citizens are getting Ozempic from pharmacies in British Columbia, and in doing so are straining the province’s supply of the Type 2 diabetes medication, which is being touted online as a weight-loss drug, B.C.’s Health Minister says.

Nashville school shooter had ‘emotional disorder’: The 28-year-old former student who killed three children and three adults at a Christian grade school in Nashville on Monday was under a doctor’s care for an “emotional disorder” and had purchased seven guns ahead of the shooting, the city’s police chief said yesterday.

Foreign buyers allowed to purchase commercial real estate: The federal government has overhauled its foreign home buyer ban to ensure that foreigners can buy and develop commercial real estate.

Morning markets

Global markets advance: Global stocks rose Wednesday as anxiety about the global financial system began to fade following three high-profile bank failures. Just after 5:30 a.m. ET, Britain’s FTSE 100 gained 0.65 per cent. Germany’s DAX and France’s CAC 40 advanced 0.89 per cent and 1.26 per cent. In Asia, Japan’s Nikkei finished up 1.33 per cent. Hong Kong’s Hang Seng jumped 2.06 per cent. New York futures were higher. The Canadian dollar was up slightly at 73.58 US cents.

What everyone’s talking about

John Manley: “Canadians have proven themselves to be open to immigration, demonstrating a willingness to pitch in to assist refugees .... But Canadian goodwill is not bottomless and could be put at risk if some newcomers are perceived to be queue-jumpers, attempting to gain unfair advantage.”

Marsha Lederman: “For Jewish people in the diaspora, our relationship with Israel can be complicated. Even if we vehemently disagree with some of its actions and policies, we can still care deeply for the place and feel, to some degree – even if it’s subconscious – a reliance on its existence.”

Today’s editorial cartoon

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Living better

Fully customized trips are on the rise

Travellers who have extra savings and pent-up wanderlust are finally ready to take that trip of a lifetime. People are planning “bucket list” trips, weeks-long adventures in once-in-a-lifetime destinations like Africa or the Arctic. And alongside these bookings, a trend in luxury travel is emerging: personalization.

Moment in time: March 29, 2021

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Ever Given gets unstuck from the Suez Canal

At the height of the pandemic, as governments around the world tried and failed to cope with COVID-19 and countless other frightening problems, there was something refreshingly stupid about this one: a big boat stuck in a tiny canal, like a chicken bone in global trade’s gullet. The crisis began on March 23, when the Ever Given, one of the world’s largest container ships, almost as long from bow to stern as the Empire State Building is tall, lodged itself diagonally in the Suez Canal. How exactly this occurred is a matter of debate – high winds were probably a factor – but the result was undeniable. The canal, a crucial shipping link between the Eastern and Western hemispheres, was blocked, stranding billions of dollars worth of cargo that included everything from TV sets to livestock. Egyptian authorities began a frantic effort to refloat the ship, digging with excavators and tugging with tugboats. Finally, after six days and thousands of hilarious Twitter posts, the guys on the tugboats noticed some movement. Within hours, the Ever Given was free. Egyptian authorities seized the boat. They released it the following July, after its Japanese owner, Shoei Kisen Kaisha Ltd., agreed to a settlement whose details were not disclosed. Steve Kupferman

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