Time for Ottawa to show some restraint

It will be a “summer of restraint” in more ways than one. Theresa Tam, Canada’s chief public health officer, warned Canadians to resist the temptations of the fair weather and be mindful of the threats of the coronavirus even as our instincts tell us to enjoy cocktails on the dock with family and friends.

The call for restraint could apply, too, to economic policy. We have moved past the emergency rescue stage that was required at the beginning of the crisis, and are now graduating to a stage of more restrained and selective support to ease into an economy that can at least start to function again with an eye to not making the pandemic any worse.

Up till now, panic-driven policy has done its job - both in terms of slowing the spread of the contagion and the cushioning of the financial blow of a shutdown. We did whatever it took, but it’s now time to move to a more deliberate approach in economic planning.

That means nipping and tucking at the programs that have been rolled out so far, making sure they work properly and reach their intended targets. The emergency response benefit, meant to complement employment insurance and give a steady income to those who suddenly found themselves without an income, will need to be modified so that it doesn’t deter people from going back to work when it’s safe to do so. The supports for rent have allowed too many people to fall through the cracks and may need some repair. The wage subsidy hasn’t taken off like it should have, so more companies need to be drawn into that process in order keep their employees at the ready.

Tinkering is now in the works on all those fronts, and both the NDP and the Conservatives have been quite productive in working with the Liberals to nail down improvements.

Deliberate planning will also mean figuring out how to deal with the two major weak spots in the pandemic economy that have not been prevented by the massive rollout of supports so far: large companies about to fail, and municipalities crushed under the burden of having to deliver extraordinary pandemic-related services. Air Canada and retail clothing chain Reitmans have both sent up distress signals in the past few days despite billions of dollars in aid and concessional loans being available to them. Municipalities aren’t eligible for federal aid and they don’t have many fiscal tools that allow them to raise money, and yet the cost burdens on them have risen exponentially during the pandemic.

Federal help would require a lot more than tinkering on these fronts. Help for municipalities would require co-operation with the provinces, and a move away from the fiscal division of powers of the past. Help for failing companies would likely require federal bailouts, an always-contentious mix of government and private business.

And a deliberate approach will also mean coming clean with Canadians about how much all these supports will cost them and the plan to pay for them.

The Conservatives, the Bloc QuÈbÈcois and the Parliamentary Budget Officer have all argued that the federal government needs to produce a fiscal update right away. Yes, it would require federal officials to commit to an economic forecast and also tally up in detail how much Ottawa has spent, and where all that money is coming from and going to - hard, but not impossible.

Prime Minister Justin Trudeau said last week that the economy is way too uncertain at this point for the government to be producing reliable forecasts. Finance Minister Bill Morneau added on Friday that his department would publish forecasts once the economy stabilizes.

But stability is a long way off. In the meantime, federal spending and lending have become so central to the recovery and to the way businesses set themselves up for recovery that federal transparency and projections are crucial. Federal forecasts and spending intentions are often a key ingredient in how companies shape their own planning, especially if they don’t have forecasting expertise of their own.

We all know that forecasts could well be outdated if another wave of COVID-19 forces another partial or total shutdown, and that many of the factors that go into a forecast are subject to how the world grapples with the pandemic. And there’s a growing sense that the recovery will be far from the instantaneous V-shape that so many had hoped for and that government, in the initial stages, had counted on.

But just like there’s a new public tolerance for glitchy video conferences, the pandemic has delivered a new tolerance for wide margins of error. The public will understand if the federal forecast needs updating in a month or two.

Let’s hope those rumours of an early June fiscal accounting come true, and we can start the summer of restraint with the full, detailed information the country needs to plot its way forward.

Heather Scoffield is a national affairs columnist for the Toronto Star.