Post-pandemic plan needs to be next priority

Every smart mountaineer knows that scaling a lofty summit is only half the job. Somehow, you’ve got to get back down again in one piece.

There’s a lesson here for the federal government. After taking Canada to the historic and, frankly scary, twin peaks of deficit-spending and national debt to get through the COVID-19 pandemic, it has to guide us back to safer, more solid terrain.

The greatest failing of the fiscal “snapshot” released by federal Finance Minister Bill Morneau on Wednesday is that it doesn’t do this. It doesn’t map out a plan for what’s going to be a very tricky descent.

To be sure, Morneau’s 168-report does a convincing job of showing us why the 2020-21 federal deficit had to hit the $343.2-billion mark — more than 10 times his original, pre-pandemic forecast.

While Canadians may experience a slight dizziness upon learning the federal debt will top $1 trillion — that’s 49.1 per cent of the country’s annual gross domestic product — for the first time ever this year, they should feel reassured all this unprecedented spending was necessary.

To save Canadian lives, but also to preserve the Canadian economy from devastation, federal and provincial governments had to lock down the country, which left millions of people unemployed or coping with reduced hours. In the ensuing recession, the federal government lost $71.1 billion in tax revenues. It also ended up holding a $227.9-billion bill for the direct spending and tax measures necessitated by the lockdown crisis.

In taking such extreme actions, the Liberal government kept businesses alive, preserved jobs and prevented families from losing their homes. Trouble is, no Canadian government can keep spending at this rate indefinitely, and Minister Morneau knows it.

The federal debt load is manageable, thanks to today’s low interest rates. But we can’t keep piling on more debt indefinitely without risking serious credit downgrades that will leave Canadians paying cripplingly high debt-servicing costs.

Clearly, Canada has to get down from the deficit-debt mountain top it’s precariously perched on today. To do this Ottawa needs to wind back some of the pandemic spending while playing an essential role in the economic recovery. It will have to be choosy. It will also have to work closely with the provinces on many initiatives.

To start, and considering how difficult it will be for many parents, especially women, to return to or continue with their jobs, the Liberals need a plan to expand daycare. This should arrive before schools reopen, rather than after.

Next, the Liberals need to provide assistance to retrain workers whose jobs have been lost to COVID-19. Federal incentives to encourage entrepreneurs to start new businesses could help fill the economic gaps left by businesses that have closed. When it’s safe, Canada should re-open its doors to the immigrants who can build new lives in this country as they help rebuild its economy.

And because the pandemic hammered international trade — Canadian exports experienced an “unparalleled drop” in April — this is the perfect time to break down trade barriers that still hamper the movement of goods and services within this country.

Finally, and this could prove unpopular, the federal government will have to seriously consider some kind of tax increase to help pay for the recovery. An increase in the GST — a consumption tax — might be the fairest way to do this.

It was good to see the government’s fiscal “snapshot” of where Canada stands today. Next up, it should provide a detailed picture of where we’re headed.