The Daily Chase: Freeland releasing fiscal update; Ontario warns feds on housing

How big will the deficit be? That’s a primary question heading into the release of the federal government’s economic and fiscal update this afternoon.

How big will the deficit be? That’s a primary question heading into the release of the federal government’s economic and fiscal update this afternoon. When the Liberals released their campaign platform this year, they forecast slightly larger deficits in the next couple of years than previously estimated. It will be interesting to see how factors beyond the government’s control (like resurgent COVID cases) will be factored into today’s assessment of Canada’s economic and fiscal health. How will the feds account for the devastating wild fires and flooding in British Columbia? And what about the benefit from higher oil prices? As a point of reference, the budget was built on an assumption of West Texas Intermediate crude at US$60 per barrel this year (and little changed from there over the forecast horizon).

All told, there are plenty of calls for the government to demonstrate some fiscal discipline. We’ll find out at 4 p.m. if those calls are heeded. Will point out here that one significant outlay was announced late yesterday when two federal ministers said $40 billion will be provisioned for compensation associated with, and reform of, Indigenous services.

ONTARIO READY TO HIKE TAX ON NON-RESIDENT HOMEBUYERS

A senior source in the provincial government told us late yesterday that Ontario will be watching today’s fiscal and economic update for progress on the federal Liberals’ campaign pledge to ban foreign money from flowing into the country’s housing markets for two years. In the absence of details on that plan, the source said Ontario will hike its tax on non-resident homebuyers to at least 20 per cent (from the current rate of 15 per cent) at the start of next year. And so we have some tension heading into the update, and reason to re-assess demand versus supply solutions to this country’s housing affordability problem.

SECOND THOUGHTS ON RETURN TO OFFICE

With daily COVID case numbers surging in recent weeks, corporate leaders are re-thinking their plans for bringing staff back into the office. Our Bloomberg partners noted late yesterday afternoon that Bank of Nova Scotia will slow its process. And Morgan Stanley Chief Executive James Gorman told CNBC he “was wrong” in his view about getting staff back in the office. This morning we’ll hear from another major Canadian office landlord when Dream’s Michael Cooper joins us shortly after 9. We’ll see if he shares Allied Properties REIT CEO Michael Emory’s view that Ontario’s top doctor delivered “odd an amorphous” guidance last week when he encouraged employers to let staff work from home.