Rising federal deficit reflects increased program spending and higher debt charges, report shows
The Government of Canada is advancing its commitment to social equity and gender equality through the launch of the Pilot Social Equity Lens Investment (SELI) Coding System.
Announced by Jenna Sudds, minister of Families, Children and Social Development, during the Sustainable Finance Forum, this new taxonomy aims to define, assess, and track progress towards the Social Finance Fund’s (SFF) investment goals.
Indigenous reconciliation has been integrated as a foundational principle within the system, ensuring inclusivity in addressing systemic barriers.
According to the Finance Department, the federal deficit stood at $13bn between April and September, up from $8.2bn in the same period last year.
The Government has attributed part of this increase to higher spending on programs and transfers, alongside rising public debt charges. Revenues rose by $20.3bn, or 9.6 percent, compared with the first half of the previous fiscal year.
Program expenses, excluding net actuarial losses and gains, grew by $21.7bn, or 11.2 percent, due to increased spending on direct programs and transfers to individuals and other levels of government.
Public debt charges also rose significantly, increasing by $5.2bn, or 22.5 percent, largely due to higher interest rates.
The SELI Coding System will be used to ensure Canada meets its investment targets, with the Government committing a minimum of 35 percent of SFF investments to initiatives promoting social equity and 15 percent to those supporting gender equality.
The Social Finance Fund represents a $755m initiative aimed at addressing systemic inequities in the traditional finance ecosystem.
The Pilot SELI Coding System was developed with input from over 60 stakeholders in the social finance ecosystem. It aligns with internationally recognized standards, such as the 2X Criteria.
By spring 2025, the Government will release the full taxonomy and implementation guide, making it available to any investors seeking to adopt equitable practices.
Minister Sudds highlighted the progress Canada is making on the United Nations' 2030 Agenda for Sustainable Development, emphasising the Government’s focus on building inclusive communities.
She also announced that Employment and Social Development Canada has joined 2X Global, a global network supporting gender-lens investing. Membership in 2X Global allows Canada to share innovative solutions and best practices while furthering the objectives of the SFF.
Boann Social Impact CEO Derek Ballantyne remarked that the SELI Coding System represents a “key step” in establishing measurable benchmarks for the SFF.
“We are looking forward to ongoing collaboration and refinement to ensure it effectively meets the diverse needs of communities,” he said.
Bernard Ndour, CEO of Fonds de finance sociale Cap finance, praised the system’s role in integrating inclusivity into investment decisions. “By shedding light on more informed and responsible investment choices, we are paving the way for a more equitable and sustainable financial future,” he said.
Kelly Gauthier of Realize Capital Partners underscored the importance of clarity in defining social equity investments.
“We welcome definitions, specificity, and clear methodologies! They give us and all participants in the social finance market the clarity and confidence that is needed to build the market,” she stated.
Jessica Espinoza, CEO of 2X Global, noted that Canada’s membership aligns with a long-standing partnership.
“The seeds of 2X Global were sown when the very first 2X Challenge was launched at the 2018 G7 Summit hosted by Canada, and ever since then, our relationship with Canada has continued to flourish and evolve,” she said.
The monthly fiscal monitor from the Finance Department noted a $1.8bn, or 46.8 percent, reduction in net actuarial losses and gains during the same period. Despite revenue growth, rising expenses and debt charges highlight fiscal challenges.
Minister Sudds reaffirmed the Government’s leadership in addressing social and environmental issues.
“The Pilot SELI Coding System is supporting critical progress in social equity and gender equality for the social finance market from coast to coast to coast. Canada is a global leader in social finance, and today, we continue our work to support innovation and build an inclusive economy that leaves nobody behind,” she said.
