Feds have funds to spend $1.75B in mys­tery money could let Ot­tawa start com­pen­sat­ing farm­ers soon


OT­TAWA — The fed­eral gov­ern­ment says it plans to spend $1.75 bil­lion by March with­out hav­ing said what the money is for, though at least some of the cash is likely to go to farm­ers hurt by new trade deals.

The gov­ern­ment re­mains tight-lipped about how it will use the rest of the “nonan­nounced” spend­ing it al­lowed for in last week’s fall eco­nomic state­ment.

In all, the gov­ern­ment has made room for $9.5 bil­lion worth of still-to-be-un­veiled com­mit­ments over the next six years.

A gov­ern­ment source says some of that will go to dairy, egg and poul­try pro­duc­ers, whose pro­tected do­mes­tic mar­kets were opened up to more for­eign com­pe­ti­tion un­der new North Amer­i­can and Pa­cific Rim trade deals. The source, who was not au­tho­rized to dis­cuss the mat­ter pub­licly, spoke on con­di­tion of anonymity.

The fall state­ment said the gov­ern­ment is still talk­ing with farm­ers and pro­ces­sors about com­pen­sa­tion for the new United States-mex­i­cocanada Agree­ment (USMCA) and the re­cently rat­i­fied Asi­apa­cific trade pact known as the Com­pre­hen­sive and Pro­gres­sive Agree­ment for Transpa­cific Part­ner­ship (CPTPP).

The ne­go­ti­a­tions will de­ter­mine the size of the fi­nal pack­age and how the money will be rolled out over the com­ing years.

In 2016, the Lib­eral gov­ern­ment ded­i­cated $350 mil­lion to help dairy pro­duc­ers deal with the im­pacts of Canada’s trade agree­ment with the Euro­pean Union. The amount in­cluded a five-year, $250-mil­lion fund for milk pro­duc­ers and a sec­ond pro­gram worth $100 mil­lion for cheese-mak­ers.

The Lib­er­als also have out­stand­ing man­date com­mit­ments they will be look­ing to ad­dress be­fore the 2019 elec­tion cam­paign and, look­ing fur­ther ahead, Ot­tawa is fac­ing lit­i­ga­tion re­lated to Indige­nous is­sues, in­clud­ing land claims. Both could draw on some of the money.

Most of the yet-to-be an­nounced fund­ing has been ded­i­cated to the later years of the pro­jec­tion, with $2.1 bil­lion set aside for 2021-22, $1.85 bil­lion for 2022-23 and nearly $2.8 bil­lion for 202324.

One pos­si­ble use for the cash: na­tional phar­ma­care.

The gov­ern­ing Lib­er­als have put to­gether a group of ad­vis­ers to con­sult Cana­di­ans and to ex­plore op­tions for a na­tional pro­gram. The coun­cil is due to re­port in 2019, when the topic of phar­ma­care is likely to be­come an is­sue dur­ing the elec­tion cam­paign.

A spokesman for Fi­nance Min­is­ter Bill Morneau ar­gued the list of the gov­ern­ment’s fund­ing com­mit­ments in the fall up­date is com­pre­hen­sive.

But Pierre-olivier Her­bert noted some mea­sures can­not be dis­closed yet due to cabi­net con­fi­den­tial­ity or be­cause min­is­ters have yet to make de­ci­sions. Is­sues of na­tional se­cu­rity, com­mer­cial sen­si­tiv­ity, lit­i­ga­tion or cer­tain mat­ters re­lated to trade agree­ments must also be kept un­der wraps, he said.

“The net fis­cal im­pact of these con­fi­den­tial or sen­si­tive mea­sures is rolled up and pre­sented at an ag­gre­gate level and will be de­tailed in due time,” Her­bert wrote in an email.

Thanks to the stronger econ­omy, Morneau had more than $20 bil­lion in ex­tra fis­cal room over the com­ing years to work with, com­pared to the fore­casts in last Fe­bru­ary’s bud­get. He chose to an­nounce new ini­tia­tives — in­clud­ing bil­lions of dol­lars worth of tax in­cen­tives for cor­po­rate Canada — that will use up all that space and then some, con­tribut­ing to slightly larger an­nual deficits be­gin­ning next year.

The doc­u­ment con­tained Ot­tawa’s long-awaited plan to help the coun­try com­pete with the U.S. for in­vest­ment dol­lars. It came in re­sponse to ma­jor Amer­i­can tax and reg­u­la­tory re­forms that many in the busi­ness com­mu­nity warn have elim­i­nated Canada’s edge as an in­vest­ment des­ti­na­tion.

The pack­age in­cludes new write-offs that are ex­pected to lower fed­eral rev­enues by about $14 bil­lion over the next half-decade all by them­selves. Pe­ter Devries, a for­mer se­nior Fi­nance De­part­ment of­fi­cial, said Morneau has now made spend­ing com­mit­ments of nearly $33 bil­lion over six years since the Fe­bru­ary bud­get. In com­par­i­son, he said the bud­get it­self con­tained $20.3 bil­lion worth of new mea­sures, although the ini­tia­tives were aimed at a much-broader range of is­sues.

“There’s some big num­bers in there,” said Devries, who writes ar­ti­cles about gov­ern­ment fi­nances and re­cently ex­am­ined the fall state­ment.

The next bud­get will serve as the Lib­er­als’ elec­tion plat­form, but Devries won­ders how the party will fi­nance it.

“Where are you go­ing to find the money for that plat­form, un­less you go into deficit even more or un­less you be­lieve that you’ve put aside suf­fi­cient re­serves in the frame­work to man­age it?” he said. “It doesn’t look like they’ve done that, ex­cept for that one line that says (nonan­nounced mea­sures).”

The fall up­date also con­tains no time­line to elim­i­nate the Lib­er­als’ short­falls, which are now pro­jected to be higher than $18 bil­lion in each of the next cou­ple of years.

The op­po­si­tion Con­ser­va­tives and some economists have crit­i­cized the Lib­er­als for not pro­vid­ing a date to bal­ance the bud­get. There are warn­ings the gov­ern­ment could face big fis­cal chal­lenges when the next eco­nomic down­turn ar­rives.


Dairy cows walk in a pas­ture at Ni­comekl Farms, in Sur­rey, B.C., in Au­gust. The fed­eral gov­ern­ment says it plans to spend $1.75 bil­lion by March with­out hav­ing said what the money is for, though at least some of the cash is likely to go to farm­ers hurt by new trade deals.

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