The Department of Finance Canada’s 2023-24 Departmental Results Report

Results achieved:

Throughout 2023-24, the Department's work focused on efforts to support Canada's transition to economic recovery following the pandemic recession. This agenda was complicated by emerging global challenges including rising inflation, climate impacts such as wildfires and flooding, the ongoing invasion of Ukraine, supply chain issues, and labour shortages. Despite these challenges, the government remained fiscally responsible and maintained Canada's position as the G7 country with the lowest net debt-to-gross domestic product (GDP).

It was in this context that the Department:

• Developed the 2023 Fall Economic Statement, providing an update on the state of the Canadian economy and the government's fiscal outlook.
• Set out new fiscal planning objectives to guide the preparation of Budget 2024, which built on the government's fiscal anchor of reducing the federal debt-to-GDP ratio over the medium term, and included maintaining a deficit-to-GDP ratio below 1 per cent in 2026-27 and future years.
• Delivered Budget 2024, including advancing measures to build more affordable homes and lower everyday costs, boost economic growth through business investment and a strong workforce, improve tax fairness, and continue to refocus government spending on top priorities.
• These actions affirmed the government's ongoing commitment to its fiscal anchor and fiscal stewardship as part of a strong economic plan.

The Department also ensured that borrowing costs remained low. This allowed the government to proceed with needed economic investments while protecting Canada's low net debt-to-GDP ratio. More specifically, the Department:

• Reduced future annual debt refinancing needs and increased the predictability of debt servicing costs by maintaining a long-term emphasis on issuance. As a result, despite higher interest rates, public debt charges remain near historical lows.
• Efficiently managed Canada's liquid reserves portfolio by achieving the key objectives of capital preservation and maintaining high liquidity, while cautiously optimizing returns.
• Implemented changes to the Debt Management Program to better support the market demand for long-dated bonds and the government's borrowing requirements, while minimizing impacts on the borrowing rates of Canadian federal, provincial, and municipal governments.
• Supported the government's continued transparency in the Debt Management Program by releasing multiple reports, including the December 2023 Debt Management Report, the annual Debt Management Strategy and the quarterly bond schedules on the Bank of Canada's website.
• Consulted the government's primary debt dealers on the development of a sustainable bond framework and updated Canada's Green Bond Framework to include nuclear energy, the first sovereign sustainable debt issuer to do so. Subsequently, a $4 billion green bond was issued at a lower financing cost than the government's conventional debt.
• Designed the updated Debt Management Strategy in Budget 2023 and in the 2023 Fall Economic Statement, optimally allocating and minimizing issuance costs for the government and all Canadian issuers.
• Delivered the Canada Mortgage Bond purchase program in the 2023 Fall Economic Statement, allowing the government to raise millions of dollars to fund affordable housing initiatives across Canada.
• Maximized the government's return on investment by providing corporate finance and strategic advice to the government on private sector projects and Crown investments.

In addition, the Department provided advice on enhancing the fairness and efficiency of Canada's tax system. To this end, the Department:

• Supported work on the two-pillar plan for international tax reform agreed to by members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting. This included the implementation of the Global Minimum Tax Act (Pillar Two) to ensure that large multinational enterprises pay their fair share of tax and are subject to a minimum effective tax rate in every jurisdiction in which they operate.
• Continued to work with international partners on an approach to Pillar One—to ensure that the largest and most profitable global corporations, including large digital corporations, pay their fair share of tax in the jurisdictions where their users and customers are located; and supported the implementation of a new Digital Services Tax until an international agreement to implement Pillar One is reached.
• Supported the introduction of a two per cent tax on share buybacks by public companies and certain publicly traded trusts and partnerships, increasing federal revenues, while also encouraging these entities to re-invest in their workers and businesses.
• Supported the development of new tax fairness measures for Budget 2024, including an increase in the inclusion rate from one-half to two-thirds on realized capital gains above $250,000 annually for individuals, and on all realized capital gains for corporations and most types of trusts.
• Coordinated with participating provinces and territories to help lower vaping rates among younger Canadians by signing bilateral taxation agreements with Ontario, Quebec, the Northwest Territories, and Nunavut to implement an additional excise duty on vaping products. 

In 2023-24, the Department aimed to achieve the following two results to ensure inclusive and sustainable economic growth, with more detail provided below:

• Canadians enjoy stronger, more sustainable, and inclusive economic growth that contributes to higher standards of living.
• Canada has a sound and efficient financial sector.

Results achieved:

Throughout 2023-24, the Department continued its commitment to support the Canadian economy, helping it to avoid the recession many forecasters predicted, with better-than-expected economic performance. In 2023-24, labour market conditions remained strong, with over 1.1 million more Canadians employed than before the pandemic, marking the fastest jobs recovery in the G7. Inflation fell from its June 2022 peak of 8.1 per cent to 2.9 per cent in March 2024 and wage growth outpaced inflation for the 14 consecutive months then ended, meaning, on average, an increase in purchasing power for Canadians.

At the same time, in 2023-24, Canadians continued to face economic challenges with key costs of living, such as groceries and housing, remaining high, and growing concern that younger Canadians may not achieve the same standard of living as previous generations.

To address these challenges, the Department supported the government in developing the plan laid out in Budget 2024—to build more homes, faster, help make life cost less, and grow the economy in a way that helps every generation get ahead. This included enhancing research support with $1.8 billion more in core research grant funding, investing $351.2 million in 2025-26 for the Youth Employment and Skills Strategy to create 90,000 youth job placements and employment support opportunities, and announcing the new Public Lands for Homes Plan to unlock 250,000 new homes by 2031.

To advance long-term economic growth and build a green, equitable, and strong economy, the Department: 

• Conducted evidence-based analysis, including through engagement with other departments, private industry, and other experts, to ensure policies and programs are effective in building a green, equitable, and strong economy. 
• Conducted economic research to inform policy, which includes assessments of Canada's current economic conditions, housing market, productivity performance, and employment and labour market participation, as well as the financial security of Canadian households and vulnerable groups.
• Continued to work across departments to support the advancement of government labour market priorities, including but not limited to skills training, labour force participation and inclusion, foreign credential recognition, and labour mobility.
• Continued to work across departments to support the advancement of government priorities in immigration, including policy advice to inform the decision to stabilize permanent and temporary immigration and measures to support historically high volumes of asylum claimants.     

Another key area of work involved support for the government's economic and reconciliation policy objectives. This included the Trans Mountain Expansion Project, where the Department:

• Provided continued oversight over the Trans Mountain Expansion Project. Following the completion of the project in the second quarter of 2024, the government's role will shift from construction oversight to oversight of operations.
• Developed financial and policy mechanisms to support Indigenous economic participation in Trans Mountain, including increased access to affordable capital.
• Continued engagement with Indigenous groups on sharing in the economic benefits of the Trans Mountain pipeline, including the launch of a participant funding program to support discussions.

In keeping with the theme of economic growth, significant new investments were announced in Budget 2024 and the 2023 Fall Economic Statement to attract job-creating projects with the goal of ensuring Canada remains globally competitive, while moving forward with emissions reduction targets and a net-zero economy by 2050. To support these objectives, the Department:

• Provided oversight and support to the Canada Development Investment Corporation in securing agreements with the Canada Growth Fund, enabling it to make its initial investments in accordance with its mandate to attract private sector capital to build Canada's clean economy.
• Continued to support the delivery of the government's major economic investment tax credits, including work to implement the Clean Technology, Clean Technology Manufacturing, Clean Hydrogen, and Carbon Capture, Utilization, and Storage investment tax credits.
• Continued development work on the implementation of the Clean Electricity investment tax credit and provided advice on the introduction of a new Electric Vehicle Supply Chain investment tax credit announced in Budget 2024.
• Provided advice on the proposed expansion of eligibility under the Clean Technology and Clean Electricity investment tax credits to support using waste biomass to generate heat and electricity, as announced in the 2023 Fall Economic Statement.
• Developed advice to implement labour requirements on businesses to pay their workers prevailing wages and provide apprenticeship training
• Provided advice to the government to promote business scale-up and growth and on policies and spending measures to support talent development, the discovery and commercialization of new ideas, and the adoption of productivity enhancing technologies. 
• Provided advice to the government on strategies to increase investment and competitiveness across all sectors, including the natural resource sectors.

The Department also continued to provide analysis and advice to support an effective policy framework for achieving long-term sustainable and inclusive growth by applying Gender-based Analysis Plus and the Quality of Life framework as tools in government decision making and budgeting that consider the impacts of policies on the well-being of all Canadians. This approach broadens the focus of government policy objectives beyond GDP to include health, society, the environment, and good government, while looking at the distribution of outcomes across Canada. The Department's advice and support helped Canada achieve the highest overall score in the OECD's Gender Budgeting in OECD Countries 2023, and the Department actively shares its expertise with other jurisdictions.

Further, the Department continued to provide policy advice to support a well-functioning financial sector that continues to meet the needs of Canadians. Accordingly, the Department:

• Continued to support the use of insurance-based strategies to address natural disaster protection gaps, including working with other government departments on flood insurance and engaging with industry on earthquake insurance.
• Prioritized measures to promote a stable and well-functioning housing finance system for Canadians, including introducing the Canadian Mortgage Charter to support Canadians experiencing mortgage hardship, providing advice on changes to mortgage rules to help grow housing supply, and reviewing and maintaining the minimum qualifying rate for insured mortgages to support prudent mortgage underwriting standards.

Results achieved:

Social policy priorities continued to be at the forefront of the Department's work throughout 2023-24, including its continued support of the roll-out of programs such as the Canada-wide $10-a-day child care system, the Canadian Dental Care Plan, and the first phase of national universal pharmacare.

In addition, the Department supported social policy priorities announced in Budget 2024, such as funding for a new Canada Disability Benefit to improve the quality of life for low-income working-age Canadians with disabilities, as part of the Disability Inclusion Action Plan. The funding consisted of $6.1 billion over six years, beginning in 2024-25, and $1.4 billion per year ongoing, for the new Canada Disability Benefit, including costs to deliver the benefit. Budget 2024 further provided funding of $243 million over six years, beginning in 2024-25, and $41 million per year ongoing, to cover the costs associated with applying for the Disability Tax Credit.

Budget 2024 also built on the federal government's ongoing work to support pathways to self- determination and greater well-being for Indigenous communities, including providing $275 million over two years, starting in 2024-25, to support Indigenous Governance and Capacity programs and capacity development.

To support these and other social policy initiatives, the Department:

• Supported the development and release of Solving the Housing Crisis: Canada's Housing Plan and the Public Lands for Homes Plan, and provided advice to the government on measures such as the provision of funding for the Affordable Housing Fund, the announcement of a new Canada Rental Protection Fund, investments in housing-enabling infrastructure, and other measures to increase housing supply.
• Supported the development and implementation of a temporary full rebate of the Goods and Services Tax on new purpose-built rental housing and the extension of the rebate to cooperative housing and new student residences. 
• Supported the Minister of Finance and National Revenue's discussions with provincial and territorial Ministers of Finance, including on economic growth and investment, tax issues, the 2022-2024 Triennial Review of the Canada Pension Plan (CPP), and Alberta's proposal to withdraw from the CPP.
• Supported the government's efforts and work to launch the new Canada Disability Benefit by July 2025, following Royal Assent of the Canada Disability Benefit Act in June 2023.
• Continued to work across departments to support the advancement of government priorities in a number of areas, including safety, security and well-being of Canadians, and the reconciliation with and rights of Indigenous people.      
• Supported the Budget 2024 government commitment to launch the Indigenous Loan Guarantee Program providing up to $5 billion in loan guarantees to unlock access to capital for Indigenous communities, creating economic opportunities and supporting Indigenous economic development.
• Continued to work with other government departments and Indigenous partners to support self-determination and fiscal capacity of Indigenous governments by advancing sustainable funding arrangements that support Indigenous self-determination and economic development.  

Results achieved:

The worldwide effects of inflationary pressures and Russia's war of aggression against Ukraine continued to affect the Department's work on the global stage. G7 and G20 Finance Ministers recognize the need to remain vigilant and stay agile and flexible in macroeconomic policy amid heightened uncertainty about the global economic outlook. They have committed to achieve a stable and growth-oriented macroeconomic policy mix that supports medium-term fiscal sustainability and price stability. To ensure a coordinated global economic recovery, the Department did the following in 2023-24:

• Monitored global economic and policy developments and provided policy advice to the government on the related impacts and risks. This included providing advice on the effect of Russia's war against Ukraine on the global economy and food and energy security, as well as policy options to support development and reconstruction in Ukraine.
• Worked in cooperation with the G7, G20, and other international partners, as well across international financial institutions and multilateral development banks, to promote and defend Canada's strategic interests, and enhance global collaboration.
• Worked in collaboration with the G7 and other international partners to promote economic resilience for critical global supply chains, protect our shared values, and preserve economic efficiency by upholding the free, fair, and rules-based multilateral system.
• Worked with like-minded international partners to optimize the balance sheets of multilateral development banks, of which Canada is a member, to enable them to increase the volume of lending to their borrowing country members, resulting in an estimated USD 215 billion of additional lending capacity at major multilateral development banks.
• Worked to improve debt sustainability and transparency across the international system by supporting G20 and Paris Club initiatives to address debt vulnerabilities of countries in need, and advocated for coordinated, timely, and transparent debt treatments.
• Engaged with international partners to encourage greater use of Climate Resilient Debt Clauses (CRDCs). CRDCs support borrowing countries' resilience by deferring debt payments in the event of unavoidable external events, freeing up critical resources required to respond to an immediate crisis.

In 2023-24, Canada remained united with its allies as Russia continued its war of aggression against Ukraine. To support the government's ongoing response to the invasion, the Department took the following actions:

• Continued to implement Canada's commitment to provide significant financial assistance to Ukraine. This included a new loan of $2.0 billion, bringing Canada's total direct financial assistance to Ukraine to over $7.4 billion since Russia's invasion in February 2022—the highest per capita of any G7 country.
• Continued to coordinate closely with Canada's G7 partners and other allies to help address Ukraine's urgent financing needs, including in the context of Ukraine's ongoing International Monetary Fund financing program, consistent with financing assurances provided by Canada and others.
• Renewed the government's trade policy responses to Russia's war in Ukraine by enacting in law the withdrawal of Most-Favoured-Nation tariff status from Russia, and extending the temporary relief from tariffs and duties on imports from Ukraine. 
• Engaged with G7 and other international partners to explore additional ways to use immobilized Russian sovereign assets for the benefit of Ukraine. 

Work also continued in support of Canada's government-wide trade priorities, where the Department:

• Worked with Global Affairs Canada in leading ongoing free trade agreement negotiations and promoted the effective implementation of existing trade agreements, including the modernized Canada-Ukraine Free Trade Agreement.
• Maintained responsive and competitive import policies, including renewal of Canada's unilateral tariff preference programs for developing countries, and providing appropriate relief on imported goods.
• Worked in collaboration with the Canada Border Services Agency to strengthen the trade remedy system, which led to the announcement of a Market Watch Unit tasked with ensuring that trade remedy measures are up-to-date and effective.
• Supported the Budget 2023 government commitment to buy goods and services from countries that grant Canadian businesses similar access to their government procurement markets by publishing the "Policy Statement on Ensuring Reciprocal Treatment for Canadian Businesses Abroad".
• Continued to strengthen, develop, and advance trade policy tools to respond to protectionist measures and to support Canada's climate ambition and broader readiness for the evolving global context.

Finally, the Department made the following contributions to international work to advance climate action and other priorities:

• Engaged in multilateral negotiations on government-backed export financing to modernize the rules of the OECD Arrangement on Officially Supported Export Credits, to promote strong environmental, social, and governance practices, and to align export credit agency financial flows with climate objectives.
• Supported G7 and international partners' efforts to fight against illicit financial flows by:
  • Leading Canada's membership in and serving as Vice-President of the Financial Action Task Force—the international anti-money laundering and anti-terrorist financing standard setting body.
  • Serving as co-chair of the Asia/Pacific Group on Money Laundering, which brings together over 81 member jurisdictions and observers to develop regional capacity.