Federal Election 2021

Federal Election 2021

After a hard-fought campaign, we have a winner. Our CIO and Head of Multi-Asset Solutions Chhad Aul summarizes the financial implications.

Trudeau wins another minority

In a battle waged against the backdrop of the COVID-19 pandemic, voters returned Prime Minister Justin Trudeau to office with another minority government. Trudeau now faces the challenge of working with other parties to enact his fiscal, health care and social platform. This includes, continuing the war on COVID-19, launching a $10-dollar-a-day childcare program and advancing the mandatory use of vaccines. As well, he wants to raise corporate and personal taxes to help offset the expected $156.9 billion 2021 deficit.




The Liberals estimate that the federal deficit will decline from $156.9 billion this year to $32 billion in 2025-26. But they offer no timeline for erasing it entirely.

The projected debt as a share of gross domestic product (GDP) could fall slightly over five years, from 51.2% to 49%. The Liberals maintain that this drop in the debt-to-GDP ratio will be its “fiscal anchor,” guiding borrowing in the future.

Spending plans also include $15 billion over three years as a “risk adjustment” to cover unforeseen costs related to the COVID-19 pandemic.


To help pay for the government’s overall spending plan, large corporations and wealthy Canadians may be asked to pay $25 billion more in taxes.

This would include a 3% surtax on banks and insurance companies earning profits over $1 billion. Part of this money will flow to what the government terms a “recovery dividend” to finance an affordable housing program.

As well, a minimum 15% tax is proposed on people in the highest income bracket. This would mean that deductions and tax credits won’t be enough to reduce their tax obligations below that threshold. However, Canada already has an alternative minimum tax, which limits the tax deduction available from certain incentives. As such, it is unclear how these measures may work in concert.

In addition, the government hopes to generate nearly $12 billion in new revenue through stepped-up tax enforcement measures.

Social programs

The Liberals plan to spend $78 billion over five years – primarily in areas such as health care, affordable housing, and care for the elderly.

In terms of maternal health, the government proposes to add new regulations surrounding abortion in the Canada Health Act, which can be approved by Cabinet without introducing legislation in Parliament. These measures would penalize any province that fails to ensure access to abortion services by reducing federal health transfers.

Nearly $6 billion would also be spent to eliminate hospital waiting lists. As well, $3.2 billion would be used over four years to hire 7,500 family doctors, nurses and nurse practitioners.

The government proposes to push ahead with its $27 billion national $10-dollar-a-day childcare program. It has agreements with eight provinces to do so.

To improve the quality of care in nursing homes, $9 billion would be spent over five years, in part to train 50,000 new personal support workers earning at least $25 per hour.


The government proposes to address the rising cost of home ownership, by spending $10 billion on affordable housing over the next ten years. In total the government wants to build 1.4 million houses over three years.

The residential rental property rebate on the Goods and Services Tax (GST) may be increased to 100%, effectively eliminating the GST on new investments in affordable rental housing. The government will also provide $125 million per year in tax incentives to increase and renovate the supply of rental housing across Canada.

As well, a rent-to-own program, with $1 billion in loans and grants would be used to develop rent-to-own projects with partners from the private, not-for-profit and co-op sectors.

To reduce speculation, an anti-flipping tax would be implemented on residential properties, requiring the home to be held for at least 12 months. In addition, new foreign ownership would be banned for 24 months after the regulation is enacted.

COVID-19 Recovery

To ensure businesses and groups that require their customers to show proof of vaccination against COVID-19 are protected, the government proposes to shelter them from legal challenges.

To help in the hiring of more workers, the Canada Recovery Hiring Program will be extended to March 31, 2022.

The Canada Workers Benefit could also be expanded to support one million additional low-wage workers. As well, the Union Training and Innovation Program could be doubled to $50 million a year to boost apprenticeship and training opportunities. In addition, federally regulated workers could receive 10 paid sick days annually.

New parents with student loans will be able to pause their payments interest-free until their youngest child turns five.

Climate change

Prior to the election, the government reset Canada’s greenhouse gas reduction target to be 40 to 45% below 2005 levels by 2030. It also increased the carbon tax to $170 a tonne.

In their platform, the Liberals proposed funding to assist in the development of small nuclear reactors and hydrogen fuels. 

Additionally, at least half of all passenger vehicles sold in Canada must be zero emission vehicles by 2030.

The Disaster Mitigation and Adaptation Fund was increased by $1.4 billion to support wildfire mitigation activities, rehabilitation of storm water systems, and the restoration of wetlands.

The government proposes to work with the insurance industry to find more cost-effective ways to protect communities from climate impacts, including floods and wildfires.

Canada Mortgage and Housing Corporation will be asked to include more climate resilience measures in its home retrofit program.


Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Investors should read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in security value and reinvestment of all distributions and do not take into account sales, redemption, distribution or other optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

This document is published by SLGI Asset Management Inc. and contains information in summary form. This document is provided for information purposes only and is not intended to provide specific individual financial, investment, tax or legal advice. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any mutual funds managed by SLGI Asset Management Inc. These views are not to be considered as investment advice nor should they be considered a recommendation to buy or sell.

Information contained in this article has been compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made with respect to its timeliness or accuracy and SLGI Asset Management Inc. disclaims any responsibility for any loss that may arise as a result of the use of the strategies discussed. This document may contain forward-looking statements about the economy, and markets; their future performance, strategies or prospects. Forward-looking statements are not guarantees of future performance and are speculative in nature and cannot be relied upon.

Please speak with your professional advisors, such as your financial advisor, or tax specialist before acting on any of the information contained in this commentary.