Liberals to go after predatory lending in today’s budget, invest in dental care plan

Finance Minister Chrystia Freeland is set to table a federal budget in the House of Commons on Tuesday afternoon, which a federal source says will include plans to go after predatory lending and more details on dental care as part of a pitch to make life more affordable.

The government official, who was granted anonymity to discuss matters that will not be public until the budget is released, said the federal Liberals intend to amend the Criminal Code to lower the amount of interest legally allowed to be charged.

Predatory lending often involves short-term loans at sky-high high interest rates. Often marketed to people in financially precarious situations, they can create a cycle of debt tough to escape.

The Criminal Code currently caps the legal interest rate at 60 per cent effective annual interest, which has been the case since it was set in 1980 — a time when the key overnight rate set by the Bank of Canada was 21 per cent, compared to the 4.5 per cent it is today.

There is an exemption in most provinces for payday loans of up to $1,500 for 62 days or less, which means in some provinces the maximum annualized percentage rate is over 400 per cent.

The source said the 2023 budget will propose the criminal interest rate be lowered to 35 per cent, which is what it is in Quebec, where courts have ruled anything higher would violate provincial consumer protection legislation. As a result, payday loan options there are limited.

The move grows out of consultations announced in the 2021 budget, which did not address payday loans directly. The source said Tuesday’s budget will propose consultations on narrowing the exemptions to the criminal interest rate when it comes to payday loans.

Getting tough on predatory lending is one way the Liberals are expected to portray this budget as offering to help vulnerable Canadians struggling with the cost of living, while balancing the need — as strongly signalled by Freeland in her pre-budget speeches — to show fiscal restraint.

Another will be offering more details on the dental-care plan, with the federal government source confirming Tuesday’s budget will include a “meaningful” investment on that front.

Last year, the Liberals committed to some form of federal dental-care coverage for low-income Canadians in its confidence-and-supply agreement with the New Democrats.

The deal means the NDP agreed to support the minority Liberal government through key votes until 2025 — including on federal budgets — in exchange for movement on shared priorities.

The Liberals were unable to set up a federal dental-care program in time for the first deadline, but brought in an interim benefit last fall for children under the age of 12 in low-income households.

The confidence-and-supply agreement stipulates that dental care must be expanded to those who are under the age of 18, seniors or people with disabilities in low-income households by the end of this year — and NDP Leader Jagmeet Singh said he expects the money in the budget.

The deal also commits the Liberals to passing legislation on a national pharmacare program by the end of 2023 — although there’s been no sign of movement on that yet.

Lower-income Canadians can expect another cash benefit to help them pay their bills, while companies looking to mine critical minerals, make batteries and electric vehicles or produce clean electricity will see a host of measures to incentivize investment in their projects.

The budget will also extend the temporary boost to the GST rebate for low-income Canadians, but will frame the payment as help with the rising cost of groceries.

It would provide up to $234 for a single person with no children, $467 for a couple with two children and $225 for a senior citizen, the same amounts as the government offered with the temporary doubling of the GST rebate last fall.

The budget is also expected to increase the withdrawal limit for a registered education savings plan from $5,000 to $8,000.

As The Canadian Press first reported last week, the budget will also outline the federal government’s plan to work with regulatory agencies to go after hidden or unexpected surcharges tacked on to the prices of goods and services.

The Liberals are also expected to make significant investments in clean energy and technology.

The Fall Economic Statement in November began Canada’s attempt to respond to the Inflation Reduction Act in the United States. That policy, pushed by President Joe Biden, injects more than US$370 billion into clean technology and climate change policies, including some significant subsidies for companies that make renewable energy and carbon capture and storage systems.

In November, Freeland promised investment tax credits for hydrogen production and some clean tech, such as renewable electricity like solar and wind power, heat pumps and industrial electric vehicles.

Several sources, who were granted anonymity because they were not authorized to speak publicly about the budget, said there will be new tax credits for the green economy. One of those sources described the tax credits as “significant.”

They are intended to spur investment in the critical mineral industry and along the electric vehicle supply chain. That would include, for example, battery components and assembly.

During her pre-budget speeches, Freeland insisted the budget will show fiscal restraint and warned the government won’t be able to compensate every Canadian for the rise in prices.

She has to balance all the spending demands with the risk the economy is going to take a turn for the worse this year. High interest rates could push Canada into a recession, which would affect tax revenues the government relies on to finance spending.

And with inflation a top concern for the Bank of Canada, the federal government is facing pressure to not fuel it further with high spending.

Freeland is expected to table the budget in the House of Commons at 4 p.m. EDT and deliver remarks on the document.