With her latest budget, Freeland faces pressure to do more — and a lot less

In her first budget a year ago, Chrystia Freeland told Canadians that there was a risk of doing too little to secure the post-pandemic recovery.

As the finance minister prepares to deliver her second financial plan later this week, there's every expectation that she will continue to spend.

Between the Liberals' own election pledges — on housing, climate change and seniors — and commitments to pursue universal dental and drug care through the party's supply and confidence deal with the New Democrats, the budget is expected to include billions of dollars in new spending.

All of it is affordable, Freeland argued last week in the House of Commons.

"The reality is that Canada is resilient and our economy is recovering well from the COVID‑19 recession," she said. "Our GDP grew 6.5 per cent in the fourth quarter, making us the second strongest economy in the G7. We have recovered 112 per cent of the jobs lost because of the pandemic, compared to only 90 per cent in the United States."

There are other favourable indicators, too.

Oil and gas revenues will be significantly higher this year as the price of oil remains at or above $100 a barrel. Corporate and personal income taxes are up by as much as 15 per cent over last year, according to Rebekah Young, director of fiscal and provincial economics at Scotiabank.

The downside is inflation, which is running at nearly 6 per cent.

Young said the danger Freeland faces with this year's budget lies in doing too much rather than too little.

"Any sort of fiscal stimulus that goes directly to Canadian households tends to be spent quickly, especially by lower-income households," she said. "That creates more demand for goods and pushes prices up."

So what should Canadians expect?

For starters, the budget is expected to include a down payment on the housing promises the Liberals made in their 2021 campaign platform.

That would include an initial investment in a housing accelerator fund to kick-start construction of new, middle-class homes, an increase in the tax credit for first-time homebuyers and new money to convert empty office towers into condominiums.

In an interview that aired this past weekend on CBC's The House, NDP Leader Jagmeet Singh said the negotiations leading to the supply and confidence agreement touched on other measures to alleviate the housing crunch.