Federal Fall Economic Statement Highlights
Fall Economic Statement Overview
Today, amidst the shocking resignation of now former Finance Minister Chrystia Freeland, the Government of Canada tabled its Fall Economic Statement (FES) for 2024. Minister Freeland’s resignation hours before she was to present the FES created chaos and confusion. There was even an attempt to stop the statement from being released publicly despite that fact that it had already been given to reporters and others, under embargo.
Minister Freeland outlined the reasons for stepping down from cabinet in a resignation letter but one of them appears to have been measures in the FES that she felt put Canada in a precarious position at a time when a tariff war appears to be brewing with the United States.
When the FES was finally released (at the same time Dominic LeBlanc was sworn in as the new Finance Minister) it contained several new measures aimed at addressing affordability, increasing economic activity, and trade and security. It also reported a deficit hat has ballooned to $61.9 billion for 2023-24, in spite of the government’s pledge to keep it at or below $40 billion.
The FES that was tabled by the Government today is broken down into three chapters:
- Reducing Everyday Costs;
- Investing to Raise Wages; and
- Safety, Security, and Fair Governance.
Below are highlighted initiatives that may be of interested to CHG clients.
The highlights of Reducing Everyday Costs include:
- Two-month GST/HST break for holiday essentials, like groceries, restaurant meals, drinks, snacks, children’s clothing and gifts.
- Canada Carbon Rebate rural top-ups. For 2024-25, the Canada Carbon Rebate is worth up to $1,800 for an urban family of four, with up to an additional $360 going to a rural family of four through the 20 per cent rural top-up.
- Stronger competition rules, leading to lower prices and improved services. This year, the federal government has made bold reforms to competition and anti-trust law. This will help to stop anti-competitive mergers that raise prices and limit choices for consumers, and crackdown on anti-competitive practices by large dominant companies that drive up prices.
- Implementing Consumer-Driven Banking to enable the adoption of new financial tools that will make it easier for Canadians to develop a budget, manage their household expenses, and hit their savings goals.
The highlights of Investing to Raise Wages include:
- Securing Canada’s artificial intelligence advantage, to strengthen Canada’s position as a global leader. The 2024 Fall Economic Statement announces the $2 billion Canadian Sovereign AI Compute Strategy, which will provide support to our world-class researchers and AI firms.
- 2024 Fall Economic Statement is announcing the Canadian Sovereign AI Compute Strategy, which will provide support to world-class researchers and innovative AI firms in the coming years. Using funding provided by Budget 2024, this Strategy will provide:
- $300 million over three years, starting in 2025-26, for the AI Compute Access Fund to help reduce the high costs and barriers that Canadian small- and medium-sized businesses face in boosting their compute capacity.
- $700 million over five years, starting in 2024-25, toward Boosting Canadian AI Champions through support for projects that will grow our Canadian AI ecosystem and create anchor firms. Funding will be available 104 Chapter 2 through a competitive call for proposals under Innovation, Science and Economic Development Canada’s Strategic Innovation Fund.
- Up to $200 million over two years, starting in 2025-26, for targeted investments to augment existing compute infrastructure and capacity in the near-term to meet immediate needs, including:
- $85 million for the Digital Research Alliance of Canada to add additional compute capacity to its national network;
- $60 million for the AI institutes—Mila, Vector, Amii—to provide compute capacity to their researchers and clients; and,
- $30 million for the Vital real-time health computing infrastructure for Trials, Artificial Intelligence, and a Learning Health System (VITAL) to pilot a secure digital AI infrastructure to leverage Canadian health data.
- $800 million over four years, starting in 2025-26, towards a transformational investment in large-scale public compute infrastructure.
- Announcing the government’s intent to introduce the Small Business Innovation and Procurement Act, to obligate federal government departments and agencies to procure a minimum of 20 per cent of goods and services from small- and medium-sized Canadian businesses.
- Several improvements to the Scientific Research and Experimental Development tax incentive program to further encourage Canadian businesses to invest in innovation and drive economic growth. These proposed measures will provide support to innovative businesses estimated at $1.9 billion over six years.
- Unlocking pension investment in Canada, by removing the 30 per cent rule which currently restricts Canadian pension funds from owning more than 30 per cent of the voting shares of a Canadian entity..
- Fully re-instating the Accelerated Investment Incentive, to ensure Canada remains a competitive place to do business, and re-instating immediate expensing for manufacturing or processing machinery and equipment, clean energy generation and energy conservation equipment and zero-emission vehicles which will protect Canadian jobs.
- Ensuring the Clean Electricity investment tax credit benefits electricity ratepayers, by announcing that for provincial and territorial Crown corporations to have access to the tax credit, provincial or territorial governments will need to publicly commit to publish an energy roadmap to achieve net-zero emissions by 2050 and request that the benefits are passed down to ratepayers.
- Delivering the details of the EV Supply Chain Investment Tax Credit. This 10 per cent refundable tax credit will be available to Canadian taxable corporations that have invested in eligible property, and have invested at least $100 million in property in each of the three EV supply chain activities (cathode active material manufacturing, EV battery manufacturing, EV assembly) eligible for the Clean Technology Manufacturing (CTM) investment tax credit. Draft legislation will be issued for consultation.
- Launching the Indigenous Loan Guarantee Program and the Canada Indigenous Loan Guarantee Corporation, as well as the opening of its loan guarantee application portal to receive applications from interested Indigenous groups. Further details can be found in the technical backgrounder.
- Expanding Capital Gains Rollover on business investment, to ensure that Canadian small businesses can access the capital that they need to grow. The 2024 Fall Economic Statement proposes to expand what qualifies as an eligible small business corporation share and to relax certain conditions for the rule to apply.
- Accelerating Digital Adoption for Small Businesses, by providing financing and expertise to help small- and medium-sized businesses adopt digital technologies, with a priority focus on AI.
- Modifying the Canada Carbon Rebate for Small Businesses, to ensure that smaller businesses are receiving more support, by creating a new base payment allowing those that have between 1 and 20 employees to qualify for a payment equivalent to having 20 employees.
Highlights from Safety, Security, and Fair Governance include:
- Securing our borders, with a $1.3 billion comprehensive border security package over six years, starting in 2024-25, to Public Safety Canada, the Canada Border Services Agency, the Communications Security Establishment, Health Canada, and the Royal Canadian Mounted Police.
- More tariffs to combat Chinese trade practices, including on imports of certain solar products and critical minerals early in 2025, and on permanent magnets, natural graphite and semiconductors in 2026 to prevent Chinese non-market trade practices from causing unfair and harmful market distortions in Canada and throughout the North American continent.
- Friendshoring Canadian supply chains, to protect Canada’s national economic interests. Canada has already imposed a 100 per cent tariff on all Chinese EVs, a 25 per cent tariff on imports of Chinese steel and aluminum products, and limited eligibility for federal zero-emission vehicle incentives to Canada’s free trade partners.
- Restricting trade with countries that harm Canada, by proposing legislative amendments to allow the government to restrict the importation or exportation of items in response to actions of another country that harm Canada, or to create more secure and reliable supply chains.
- Eradicating forced labour from our supply chains, by requiring businesses to scrutinize their international supply chains for risks to fundamental labour rights and take action to resolve these risks, and by strengthening Canada’s ban on imports of goods produced by forced labour.
- Ensuring reciprocity across our trading relationships, to ensure Canadian workers and businesses are treated fairly when doing business abroad. The 2024 Fall Economic Statement announces that going forward, reciprocity will be considered as a requirement for all federal spending and policies.
- Strengthening nuclear fuel supply chains, to support demand for allied enriched nuclear fuel and bolster supply chain resiliency free of Russian influence. The 2024 Fall Economic Statement announces the government’s intent to backstop up to $500 million in enriched nuclear fuel purchase contracts from the United States or other allied countries, including high-assay low-enriched uranium (HALEU).
- Strengthening supply chains for responsibly produced critical minerals, through previous investments like Canada’s $3.8 billion Critical Minerals Strategy that are positioning Canada as a supplier of choice for responsibly produced critical minerals. Canada will work with the United States and other likeminded partners to address the impacts of non-market policies and practices that unduly distort critical mineral prices.
The FES also had a number of initiatives on housing: Progress Building More Homes.
- Adding Secondary Suites to Single-Family Homes The 2024 Fall Economic Statement proposes to double the loan limit for the Canada Secondary Suite Loan Program to $80,000. The program will make it cheaper to add secondary suites by offering 15-year loan terms at a low interest rate of just 2 per cent, and will be administered by the Canada Mortgage and Housing Corporation. Funding would be sourced from existing departmental resources. The Canada Secondary Suite Loan Program will launch in early 2025.
- Accelerating Funding to Build Faster Due to high demand for the Apartment Construction Loan Program, the 2024 Fall Economic Statement announces that the government is accelerating $2 billion in low-cost financing, supporting 4,000 homes to be built faster. This ensures builders can access this critical financing now, not in the years ahead. This funding would be sourced from existing departmental resources.
- The $6 Billion Canada Housing Infrastructure Fund The 2024 Fall Economic Statement announces that through existing funding allocated under the Canada Housing Infrastructure Fund’s $5 billion provincial and territorial stream, the federal government will fund:
- The Winnipeg North End Sewage Treatment Plant in Manitoba, by providing $150 million over four years, starting in 2026-27; and,
- The Iona Island Wastewater Treatment Plant in Metro Vancouver, British Columbia, by providing $250 million over five years, starting in 2025-26.
- Building up to Four Homes at a Time The 2024 Fall Economic Statement announces that the government is working with the Canada Mortgage and Housing Corporation to explore options for using mortgage loan insurance to support the construction of more two-to-four-unit homes.
- More Financing for Affordable Housing. The 2024 Fall Economic Statement announces that $50 million over two years, starting in 2025-26, will be available through the Affordable Housing Fund for affordable housing providers to use for pre-development work. This funding would be sourced from existing departmental resources.
- Supporting Women and their Children Fleeing Violence The 2024 Fall Economic Statement announces that $50 million from the Affordable Housing Fund’s Rapid Housing Stream will be accelerated in 2025-26 to build more women’s shelter spaces. This will help ensure the safety and security of vulnerable women and their children. This funding would be sourced from existing departmental resources.
- Supporting Non-Profit and Co-Op Housing Residents The 2024 Fall Economic Statement proposes to provide $362.7 million over five years, starting in 2028-29, to extend the Federal Community Housing Initiative, which will provide tens of thousands of households with certainty they will continue to receive the rental assistance they count on.
- Removing the Stress Test at Mortgage Renewal The 2024 Fall Economic Statement announces that the government will launch consultations on ways to improve the structure and effectiveness of the stress test on insured mortgages.
- In addition, following OSFI’s announcement, the government is amending the mortgage insurance rules to remove the stress test requirement for uninsured mortgage holders who switch from a federally regulated lender to a lender that purchases portfolio insurance for the mortgage. Today, the Department of Finance published a technical backgrounder outlining the parameters for this measure, which is effective immediately.
- Reviewing Long-Term Fixed Rate Mortgages The 2024 Fall Economic Statement announces that the government will launch consultations on the market development of long-term mortgages in Canada.
- Energy Retrofits with $40,000 Interest-Free Loans The 2024 Fall Economic Statement announces the Canada Greener Homes Loan Program will deliver an additional $600 million in interest free loans to support 15,000 to 24,000 more homeowners in reducing energy costs and advancing Canada’s goal of achieving net-zero emissions by 2050. This investment has a fiscal cost of $174.4 million over six years, starting in 2024-25.
- Combatting Mortgage Fraud The 2024 Fall Economic Statement announces that this fall, the CRA has expanded its outreach to the broader financial sector, including mortgage lenders, on how to best design and implement a new tool to combat mortgage fraud. The CRA aims to begin implementation of this measure in early 2025.