The middle class has taken a financial hit in order to bring inflation down.
Higher interest rates, housing affordability shortfalls, rising retail costs, increased leisure costs for things like travel and entertainment.
But the federal government feels relief from that pressure is on the horizon, says Harjit Sajjan, federal Minister of Emergency Preparedness.
Speaking to Black Press Media this week after the Liberal government releases its Fall Economic Statement, Sajjan said there is some optimism that interest rates will begin to decline in the next year.
That decision rests solely with the Bank of Canada to in part address inflation and recession concerns.
While a Business Development Bank of Canada economist told a Kelowna Chamber of Commerce audience predicted interest rates will begin to fall next summer, Sajjan wasn’t ready to give a specific time frame on that issue.
“What I have heard is there is an expectation interest rates will go down at some point in the next year, so that is optimistic, but our government is also taking measures to address the financial burden facing many Canadians right now,” he said.
In the economic statement, Sajjan noted it includes new funding allocated to assist with affordable housing construction for the 2025-26 fiscal year, a new cooperative housing development program to be launched in early 2024, a yet unspecified mortgage relief initiative and re-access allocation of federal Crown land for housing options.
This new round of spending initiatives will add billions to the national debt.
The Fall Economic Statement shows public debt charges are $46.5 billion this year and will rise to $52.4 billion in 2024, which is almost as much as the government will pay out in the Canada Health Transfer payments to the provinces next year.
But Sajjan argued the debt increase is not a result of inefficient spending, but an investment in Canadians that will provide added revenue to reduce that debt with further economic growth and prosperity.
“We know we would face challenges coming out of the pandemic but as a country we have retained our AAA credit rating, have the lowest inflation levels of all the G7 countries and our job creation remains strong and unemployment is low,” Sajjan said.
He acknowledged with projections for economic growth, addressing a labour shortage and affordable housing remain significant issues that could stifle economic growth.
While national immigration levels have been increased to 465,000 in 2023, 485,000 in 2024 and 500,000 in 2025, he said more housing options are needed for these potential workers and business entrepreneurs.
“One of the biggest things we have done is remove the GST from rental housing construction costs, which will have a significant impact to incentivize more rental housing being built,” he said.
“Growth is about people, and Kelowna is like many places where there is a great opportunity for economic growth, people want to come to Kelowna to live, but the challenge to that is to provide adequate housing to meet that demand.”
Sajjan said in a global marketplace that is becoming increasingly unstable from both economic and political perspectives, Canada is not immune from the blowback of that instability.
But in the post-pandemic world, he said, there is a growing reality that supply chain reliance on one provider, most notably China, needs to give way to greater diversification, citing the creation of PacifCan to help stimulate more investment in economic projects and partnerships in B.C.
“I think what we have learned is the need to create a North American economic bubble for greater economic supply chain stability,” he said.
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