If you are one of the nearly 19 million working Canadians expecting to receive a $250 cheque from the Liberal government in the new year, don’t spend the money just yet.
Sources have told National Post that Finance Minister Chrystia Freeland will reverse the government’s position on the “Working Canadians Rebate” that would have cost an estimated $4.68 billion.
One person with knowledge of the plans said that the measure will not be in the fiscal update on Monday, but the government hopes to take another look in the new year, if it can find another party to support it.
Emails to Freeland’s office and to the Prime Minister’s Office seeking confirmation were not returned by deadline.
The Liberal government’s initial plan was to send $250 cheques to the 18.7 million Canadians who worked in 2023 and earned less than $150,000, but it has not been able to get the measure through Parliament.
While the GST holiday received the backing of the NDP, Jagmeet Singh was clear that his party would withhold support for the rebate cheques unless seniors, people with disabilities and injured workers were included. The Bloc Québécois adopted a similar approach. An expanded rebate could have added another $2 billion to the cost.
One official, who was not cleared to speak publicly, said the government is trying to stay within certain spending boundaries.
The removal of the commitment to spend nearly $5 billion on a measure the Finance Department did not believe made financial sense will be seen as a victory of sorts for Freeland.
It has been widely reported that the affordability package originated in the Prime Minister’s Office, which originally proposed the two-month GST holiday that started on Saturday and the $250 stimulus cheques planned for the spring.
However, it is clear that Freeland was unenthusiastic and that there has been a rupture in relations between the two most senior ministers in government.
The finance minister has appeared strained and seemed to tear up when she was asked about the tensions over spending at a press conference on Friday.
The last time a finance minister disagreed with the prime minister on spending — Bill Morneau on COVID benefit levels — Trudeau resolved that Ottawa wasn’t big enough for both of them.
Freeland appears to be under similar pressure, despite the affinity the prime minister is said to feel for her. Barely a day goes by without a new story about former central banker Mark Carney being lined up to replace her. The Globe and Mail has reported that the PMO is planning for two cabinet shuffle scenarios: one that includes Carney and one that does not. Emails to Carney seeking comment were not returned by deadline.
A cabinet shuffle is overdue: there are two vacancies and four other ministers have said they are not running in the next election.
It remains possible that there is a shuffle onTuesday that sees Carney revealed as the new finance minister, although one source suggested that timing is becoming less and less likely.
But this is no way to run a country.
We have reached a level of dysfunction at the very top that is even greater than at the time of the Morneau-Trudeau spat.
It is government by improv, with all the inconsistency and miscommunication that entails when you are making it up as you go along. “There are a lot of moving parts,” said one official.
The best thing that can be said about the disappearing cheques is that they will not be missed.
The package has not had the desired effect with voters. A Postmedia-Leger poll earlier this month said seven in 10 respondents thought the measures were merely an attempt to get people’s votes and only one in five agreed they are “good measures” that will help people cope with inflation. The poll suggested Liberal support fell after the package was announced.
The fiscal update is likely to reveal that deficits for 2023/24 and 2024/25 are much higher than the $40 billion Freeland committed to in the last budget.
She told Bloomberg last week that the debt-to-GDP level will decline, as promised, but she would not comment on the size of the deficit. Finance sources suggest it might rise to $60 billion last year and this.
Having pulled the $4.68-billion giveaway, Freeland can at least make the case that the money will be better spent on measures that will help Canada weather the incoming Trump administration, such as those she announced last Friday.
At the press conference in Toronto, she said the government will invest an extra $1.9 billion over six years in the country’s flagship innovation tax credit, the Scientific Research and Experimental Development tax incentive, and a further $1 billion in the Venture Capital Catalyst Initiative to help grow mid-sized Canadian companies.
She said the government will also spend billions on a program to build data centres by attracting investment from Canadian pension funds. Under the scheme, funds would have to invest $2 for every dollar the government spends on AI data centres, up to a total of $45 billion.
If the fall economic statement is Freeland’s swan song as finance minister, she can at least claim she tried to do something meaningful, rather than simply resorting to liberal use of the slop bucket.
Twitter.com/IvisonJ
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