Freeland's mini-budget waives interest on student loans, sends more money to low-income workers

Finance Minister Chrystia Freeland tabled her fall economic statement Thursday — a multi-billion dollar plan that calls for more spending even as the economy stands on the brink of a recession, with interest rates set to move still higher.

While Freeland has promised fiscal prudence in this era of sky-high inflation, the mini-budget proposes new programs to help some of the people hit hardest by rising prices — including students and low-income workers — and to launch what she called "a real, robust industrial policy" to position Canada for future economic growth.

Freeland announced that all federal student and apprenticeship loans will be interest free permanently and unveiled a multi-billion dollar plan to automatically send Canada Workers Benefit (CWB) payments to people who qualified in the previous tax year.

The document also includes a plan to match some of the clean-energy incentives recently introduced in the United States through the U.S. Inflation Reduction Act, which the government sees as a threat to future investment in Canada.

The upshot: $30.6 billion in new spending over the next six years.

The government's current fiscal health is much better than expected thanks to higher oil prices and growth in personal and corporate taxes.

Freeland told the House of Commons Thursday that improvement in the federal fiscal picture "didn't happen by accident."

"It happened because people struggled through COVID, they kept their businesses going, they kept working and operating," she said. "And that's why Canada is in this pretty remarkable position of significantly outperforming our forecasts in the budget in April."

WATCH: 'Economy is slowing down,' says Freeland

Freeland's spring budget projected a deficit of $52.8 billion for the 2022-23 fiscal year. Now, the fall economic statement is forecasting a deficit of $36.4 billion.

That's still a lot higher than the $23 billion deficit Ottawa could have posted had it saved more of its financial windfall instead of earmarking it for new programs.

Asked if it was appropriate to spend some of the newfound revenue with the economy in a precarious state, Freeland said the government has "chosen to invest that upside."

The government is juggling two goals, Freeland said: it wants to avoid stoking inflation while also supporting people hit hard by the rising cost of living.

"We need to strike a balance today between, on the one hand, being fiscally responsible, keeping our powder dry, given the global economic uncertainty and, on the other hand, being compassionate, providing support to those people who need it," Freeland told reporters.