Canada Releases Federal Budget for 2022, Includes $31.2B CAD in New Spending

Published: April 15, 2022

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Last week, the Canadian federal budget for 2022 was introduced. It dedicates $31.2 billion Canadian Dollars (CAD) in new spending over five years and focuses heavily on programs related to housing, defense, and the environment.

Please note: All monetary figures are expressed in Canadian Dollars (CAD) unless otherwise specified.

Last week, Canada’s Liberals introduced the latest federal budget, entitled Budget 2022, “A Plan to Grow Our Economy and Make Life More Affordable.” The budget addresses a variety of issues, including affordable housing, tax fairness, clean energy initiatives, defense and security, public health, and Indigenous reconciliation. Between these and other areas, the budget includes $31.2 billion in new spending over the next five years. Major new spending initiatives include:

Affordable Housing – $10B for programs designed to increase housing supply:

  • $4B for a new Housing Accelerator Fund to help municipalities expedite housing development
  • $1.5B to extend the Rapid Housing Initiative to build more units
  • $725M to introduce tax-free savings accounts to help first-time homebuyers save money

Clean Energy Initiatives

  • $3.8B to implement a strategy to exploit critical minerals
  • $2.6B to finance a new investment tax credit for businesses that spend money on carbon capture, utilization, and storage (CCUS)
  • $1.7B to extend incentives for purchasing electric vehicles
  • $900M to build charging infrastructure for electric vehicles, including $500M for urban settings and $400M for suburban and rural stations
  • $700M to promote greener buildings and neighborhoods
    • $150M to revise building codes to promote the use of low-carbon construction materials
    • $200M to conduct deep energy retrofits of large building projects
  • $548M to encourage businesses to purchase medium- and heavy-duty zero-emissions vehicles

Defense and Security – $8B to increase Canada’s defense capabilities:

  • $6.1B over five years to increase the capabilities of the Canadian Armed Forces, plus $1.4B each year thereafter
  • $875M over five years and $238M a year thereafter to bolster cybersecurity
  • $500M in military aid to Ukraine
  • $100M to strengthen leadership and implement culture change in the Canadian Armed Forces and modernize the military justice system

Public Health

  • $5.3B over five years for a national dental care program, plus $1.7B each year thereafter

Indigenous Reconciliation – $10.6B to support Indigenous children, families, and communities:

  • $4B for housing
    • $2.4B for housing on First Nations reserves
    • $845M for housing in Inuit communities
  • $4B to secure access to health, social, and educational services for First Nations children through Jordan’s Principle
  • $400M to improve infrastructure on reserves
    • $247M for water and wastewater infrastructure
  • $210M to help communities document, locate, and memorialize burial sites at former residential schools
  • $5M to allow the Royal Canadian Mounted Police to assist in community-led investigations into burial sites at former residential schools

Diversity and Inclusion

  • $100M over five years for a federal LGBTQ2 action plan
  • $85M to support ongoing work on the anti-racism strategy
  • $50M to support black-led and black-serving community organizations
  • $15M to support local journalism in underserved communities and to help racialized and religious minority journalists present their experiences and perspectives

Miscellaneous Items

  • $269M to procure wildfire equipment
  • $625M to establish an early learning and childcare infrastructure fund
  • $600M to build more resilient and efficient supply chains
  • $385M over five years and $86.5M a year thereafter to speed up the processing and entry of immigrants, students, and visitors

In addition to these highlights, the nearly 300-page budget includes some notable smaller-ticket items as well. The budget puts $55 million towards fixing Canada’s trail network, $20 million towards studying the long-term effects of COVID-19, and $16 million towards stopping harassment in sports, among other items. Although there is no money attached to it, another noteworthy initiative is a commitment to developing new tools, guidelines, and targets to facilitate green (or sustainable) procurement. This initiative is designed to reduce the environmental impact of procurement operations, particularly by lowering emissions.

After years of big-COVID-related spending, Finance Minister Chrystia Freeland promised a return to “fiscal responsibility” with Budget 2022. Indeed, the $31.2 billion in new spending is a fraction of last year’s new spending investment of $101.4 billion. Most pandemic spending programs are also winding down. Only $400 million has been earmarked for pandemic support, compared to the $17.7 billion from last year.

While the new budget makes significant investments in housing, defense, and clean energy, it is a departure in some areas from what was promised by the Liberals during the 2021 election cycle. The Liberal Party’s official election platform, released in September of last year, laid out several key spending initiatives that are missing from the new budget. Most notably, it omits campaign promises of providing more money for healthcare, mental health, and long-term care, as well as more support for seniors.

Ultimately, Budget 2022 marks the end of the pandemic spending era. The budget is modest in its spending, a strategy meant to reduce Canada’s debt-to-GDP ratio and unwind COVID-19-related deficits. Although this is only Freeland’s second federal budget, it will be a test of how she and the Liberals can bring Canada’s economy back from its pandemic lows. For the finance minister, this budget “is about growing our economy, creating good jobs, and building a Canada where nobody gets left behind. Our plan is responsible and considered, and it is going to mean more homes and good-paying jobs for Canadians; cleaner air and cleaner water for our children; and a stronger and more resilient economy for years to come.”