Freeland tables her fourth federal budget - this time with a tight focus on housing

Finance Minister Chrystia Freeland will table her fourth federal budget to‐ day, laying out the govern‐ ment's plan to spend bil‐ lions of dollars on housing to improve supply - a plan the Liberals also hope will boost their prospects with a crucial group of voters.

Unlike past budgets, which mostly saved their an‐ nouncements for budget day itself, this one has been pub‐ licized piecemeal. Freeland, Prime Minister Justin Trudeau, Housing Minister Sean Fraser and other cab‐ inet ministers have been touring the country for weeks, releasing details of key budget measures.

It's part of a plan to pitch voters on key new programs that otherwise might have been buried in today's news coverage of a budget docu‐ ment that's expected to be physically bigger than in years' past.

Freeland will table the budget around 4 p.m. ET. CBCNews.ca will carry her re‐ marks in the House of Com‐ mons live.

Ottawa has announced roughly $38 billion in new fi‐ nancial commitments - in‐ cluding $17 billion in loanbased programs - before the budget's release.

How the federal govern‐ ment intends to pay for all that new spending isn't clear yet. Sources have told RadioCanada that the budget will impose a tax increase on the richest taxpayers - one that senior Liberal sources say will affect less than 1 per cent of Canadians.

Some of the planned new spending is earmarked for future fiscal years - a ma‐ noeuvre that will give Ottawa some fiscal breathing room.

The economy is also mar‐ ginally stronger than Ottawa initially projected, which could mean higher revenue to offset some of the plan‐ ned new spending.

Polls continue to suggest the government is polling un‐ derwater with house-hunting voters - particularly those in the millennial and Genera‐ tion Z cohorts.

In response, Freeland has freed up money to send more cash to municipalities through the housing acceler‐ ator fund, build more homes on underused public lands, cut cheques for new water and solid waste infrastruc‐ ture in growing communities, offer tens of billions of dol‐ lars in loans to spur new rental construction and sec‐ ondary suites, and help nonprofits acquire existing rental homes and keep them af‐ fordable.

The government's 28page housing plan, unveiled last week, promises to main‐ tain the already well-sub‐ scribed tax-free savings ac‐ count, extend mortgage amortization terms and in‐ crease the RRSP withdrawal limit for some first-home buyers, among other mea‐ sures.

It's a dizzying array of new commitments meant to blunt the attacks of critics like Con‐ servative Leader Pierre Poilievre, who has made housing the centrepiece of his policy playbook.

Speaking to the Canadian Chamber of Commerce on Monday, Trudeau said millen‐ nials and members of Gener‐ ation Z, the people who now make up a majority of the country's workforce, need a hand up as they grapple with "a cost of living crisis."

"This is a resilient group but ... they now feel like mid‐ dle class stability is out of reach," he said. "We need to meet this moment. Our country cannot succeed un‐ less young people succeed."

WATCH: Freeland unveils new measures for firsttime homebuyers

Freeland also has an‐ nounced a $500-million fund for youth mental health, $2.4 billion for artificial intelli‐ gence, $8.1 billion in new de‐ fence spending and $1 billion to expand school lunch pro‐ grams.

"We recognize that there is an urgent need today to in‐ vest in Canada and Canadi‐ ans, and we recognize in par‐ ticular that we're at really a pivotal moment for young Canadians, for millennials, for Gen Z," Freeland said last week.

It's a longstanding Canadi‐ an tradition for the finance minister to purchase a new pair of shoes before budget day.

On Monday, Freeland chose a pair of black pumps from Maguire, a Montrealbased firm owned by millen‐ nial women - a nod to the people the government is hoping to reach with its latest spending plan.

While the budget is ex‐ pected to boost spending, Freeland has said it won't in‐ crease the $40 billion deficit forecast last year. Today, the public will learn what the government's projected defi‐ cit and debt levels are and how it plans to keep the country on a sustainable fis‐ cal track.

The Trudeau government has run a deficit every year since it was elected.

It posted even bigger deficits during the COVID-19 pandemic as it scrambled to shore up an economy on the ropes during an unpreceden‐ ted global health crisis.

On the Liberal govern‐ ment's watch, the national debt has more than doubled to $1.2 trillion.

Now, with interest rates at a 20-year high, the cost to carry that debt has spiked from $20.3 billion in 2020-21 to $46.5 billion, according to Freeland's fall economic statement.

That's nearly double the amount Ottawa spends on the military. And debt service charges can be expected to march even higher in the years ahead.

WATCH: Tax increase ex‐ pected in federal budget

As economic growth stag‐ nates and high inflation adds to the government's spend‐ ing pressures, Ottawa faces some tough choices.

Freeland's preferred fiscal "guardrail" has changed over the years.

In the fall economic state‐ ment, Freeland said Ottawa would keep the deficit at about one per cent of gross domestic product (GDP) - es‐ sentially one per cent of the size of the national economy - and lower the debt-to-GDP ratio.

Tuesday's document will reveal if Ottawa has kept that promise. The government's decision to cut or "reprofile" some spending - with esti‐ mated savings of about $2.25 billion a year - has helped, but there may be more to do.

Canada flirting with a rating downgrade, RBC warns

In a recent report, RBC Royal Bank warned that Canada faces a possible rat‐ ings agency downgrade which would be a bad devel‐ opment for the government and everyone else who bor‐ rows money in this country.

Canada is one of the se‐ lect few countries with a AAA credit rating on its sovereign debt.

RBC said "Canada is at a greater risk of a downgrade than other top-rated peers" as Ottawa piles on more spending to tackle the hous‐ ing crisis.

"Even though deeper deficits and higher associ‐ ated sovereign borrowing costs may feel like a distant problem for many Canadi‐ ans, the impact has the po‐ tential to trickle down to most households and busi‐ nesses," economist Rachel Battaglia said in the RBC re‐ port.

Experts are expecting the government to increase tax‐ es.

Freeland last week ruled out a middle-class tax hike but this government's defini‐ tion of "middle class" has never been clear.

"I'm pretty confident they will raise revenues because they've squeezed themselves on their fiscal situation and they continue to commit to spending that is not sustain‐ able," said Robert Asselin, se‐ nior vice president of policy at the Business Council of Canada and an adviser to Bill Morneau when he was fi‐ nance minister.

Budget expected to target wealthy Canadians

Many experts have been predicting tax measures tar‐ geting wealthy Canadians or large corporations, or both.

"The problem for [the gov‐ ernment] is either a surtax on big corporations or a wealth tax sounds very good, but in practice they're terri‐ ble. They don't work," said Asselin.

"Let's be honest. They have to raise taxes. I don't think that's a big secret. But can they do it in a thoughtful, provocative way?" said James Thorne, chief capital market strategist for Wellington Altus Private Wealth.

"If you do it on the highincome people, they're just going to move their money offshore."

Speaking to reporters on Parliament Hill Monday, NDP Leader Jagmeet Singh said he expects the government - his party's partner in the confi‐ dence-and-supply agreement - to "take on corporate greed."

"The wealthy should pay," he said, adding that big busi‐ ness should also shoulder the burden.

"We do not want to see any pressure put on working people. We don't want tax in‐ creases on working class people. We want to see big corporations start paying their fair share."

At a conference in Ottawa last week, Poilievre - who has mocked Trudeau and his gov‐ ernment as "not worth the cost" - said his party will fight tooth and nail against any tax increases.

"We believe that a dollar in the hands of a person who earned it is always more powerful than in the hands of a politician who taxed it," he said.