National Post (National Edition)
More pandemic spending on its way
OTTAWA • After running a deficit of more than $380 billion in the fight against COVID-19, the government is pledging to spend as much as $100 billion more to ensure the pandemic's economic scars aren't permanent.
Finance Minister Chrystia Freeland presented the numbers in her long-awaited fiscal update Monday afternoon in the House of Commons, promising to ensure Canada was positioned to come out of the pandemic stronger.
“The job we have to do right now is to be sure that our economy is not scarred, to be sure that our economy is not wounded, so that we can come out of this crisis roaring back,” she said.
With COVID numbers on the rise, Freeland said Canadians should know that there is a plan to get the country back to normal.
“I want Canadians to know that we have a plan to get through the winter,” she said. “We have a plan to provide vaccines to Canadians. And we have a plan to build our economy back in the spring.”
The government will run a deficit of at least $381 billion, according to its estimates, but warns with a resurgence in the virus and escalated lockdown measures, that number could grow to nearly $400 billion. Either way the astounding sum will be the highest relative to the economy since the Second World War.
In the government's last update in July, the deficit was estimated at $343 billion, but more measures have been added since then.
In subsequent years, the government is predicting ongoing deficits with the country expected to be at least $121 billion in the red next year and $24 billion in deficit five years from now.
Conservative Leader Erin O'Toole said the government was not offering a clear way out of the pandemic with a plan for rapid testing and a quick rollout of vaccines.
“Canadians have shown courage and fortitude. They have respected directives from our health authorities, but Canadians are hurting,” he said. “This fall economic statement shows they can not rely on the government to get their lives back.”
O'Toole said the government has been late every step of the way during the pandemic.
In concrete measures, Freeland announced the government's wage subsidy would be boosted to 75 per cent of employee wages until March next year, to help businesses through some of the slower months at the start of 2021. Hard-hit sectors like hospitality and tourism will also have access to a new loan program that will be 100-per-cent governmentbacked.
The government will spend $2.6 billion over the next seven years for home energy retrofit grants of up to $5,000 and spend more than $3 billion to plant two billion trees.
Responding to calls earlier in the year, to change the fiscal stabilization program that pays money to hard-hit provinces, the government made changes that should allow for provinces with massive revenue drops to receive greater transfers next year.
There will be more money to help shore up long-term care homes from the worst impacts of the virus. Lowand middle-income parents of young children under the age of six will get an additional $1,200 top-up under the Canada Child Benefit next year.
There are no firm details, but the government is also pledging to move toward a national childcare system, using the system in Quebec as a model. The program will have to be developed with provincial governments, but the Liberals pledged money for training programs for early childhood educators.
“Just as Saskatchewan once showed Canada the way on healthcare and British Columbia showed Canada the way on pollution pricing, Quebec can show us all the way on child care,” Freeland said in her speech in the House.
After COVID, Freeland said the government will spend between three and four per cent of GDP, between $70 and $100 billion over the next three years to spur the economy back into action.
The government's spending
has previously been constrained by fiscal anchors or guardrails, though the Liberals missed some of their own targets on this front. Freeland said the amount of spending will be guided by rules again, with a focus on employment measures like unemployment and hours worked.
According to the government's numbers, about 80 per cent of the jobs lost early in the pandemic have come back. Freeland declined to cite specific numbers or targets, but said employment will be their guide.
“As we build our growth plan and as we deploy it, the measure we're going to be looking at to see if we've got the job done is really around jobs,” she said.
The government is also moving ahead with plans to charge GST and HST on digital companies like AirBnB, Netflix and Amazon. It will impose an additional tax on web giants starting 2022, ahead of plans from the Organization for Economic Co-operation and Development for a unified approach across developed nations.
NDP leader Jagmeet Singh said the Liberals are managing the economy without thinking about the people who have lost jobs during this pandemic. He said they're not looking seriously at increased taxes for the wealthiest Canadians.
“We see a Liberal government that is not willing to make the wealthiest pay their fair share.”
Singh said, despite the record spending, he sees the government talking more about reducing supports than increasing them and that is not a direction he can support.
“They have indicated with this economic update that they are going down the path of Conservatives to cut the help to people, that is not the path we want to go.”