What to expect from the federal government's long-awaited fiscal update

The federal government's prescription for the COVID-19 pandemic — spending is the best medicine — hasn't varied much since the spring. The finance minister is signalling that approach will continue (if in much smaller doses) in next week's economic statement.

Freeland is expected to offer more pandemic spending measures and stimulus projects with 'green' elements

Deputy Prime Minister Chrystia Freeland holds a media availability in Ottawa on Monday, Nov. 23, 2020. (Sean Kilpatrick/The Canadian Press)

The federal government's prescription for the COVID-19 pandemic — spending is the best medicine — hasn't varied much since the spring. The finance minister is signalling that approach will continue (if in much smaller doses) in next week's economic statement.

"Our plan will continue to support Canadians through the pandemic and ensure that the post-COVID economy is robust, inclusive and sustainable," Chrystia Freeland told the Commons this week.

Her economic statement will be the first detailed fiscal update from the federal government since March 2019. Back then, the Liberals were still in their first mandate. Bill Morneau was the finance minister. COVID-19 didn't exist.

While other countries have produced financial blueprints since the pandemic and the subsequent lockdowns, the Trudeau government initially refused, arguing the pandemic made it impossible to forecast economic growth, or even government spending, with any degree of accuracy.

That's one of the reasons Freeland's update on Monday is generating so much advance interest.

Keep your eye on the ball, says business council

"We're expecting the update will be very pandemic focused and that is good news," said Goldy Hyder, the president and CEO of the Business Council of Canada, which represents more than 150 companies in every sector and region of the country.

"Let's make sure we are managing the crisis at hand and not ... 're-imagining' Canada."

Government sources (who are not authorized to speak publicly) tell CBC News the update will include new but time-limited spending measures to deal with the pandemic's economic impact on specific industries and vulnerable Canadians, while laying the groundwork for the policy priorities listed in September's speech from the throne.

They also say the cost of the new stimulus will be in line with the percentage of GDP represented by other G7 countries' pandemic plans.

An airline employee sprays down a passenger cabin with disinfectant. Airlines and other sectors associated with the tourism industry are expected to get some sort of aid in the upcoming fiscal update. (CBC News)

While they would not set out exact details, the measures in the update are expected to include:

  • Support for airlines and the tourism and hospitality sector, which have yet to recover from border closures and ongoing lockdowns.

  • Money to help long-term care homes control infections.

  • Support to help women return to the workplace.

  • Some infrastructure projects tied to the government's commitment to reduce greenhouse gas emissions as part of the economic recovery.

Job creation with a green gloss

In 2009, stimulus projects meant to help lift Canada out of the global recession were tied primarily to putting people back to work.

The focus this time would be on both job creation and helping Canada meet its emission reduction targets. Rather just widening a highway, for example, a pandemic stimulus project might also install charging stations for electric vehicles. A project to refurbish a hockey arena might include the installation of solar panels.

A worker installs a small solar array in Kugaaruk, Nunavut. (Submitted by Alex Ittimangnaq)

"Think of these measures as a down payment on what is to come once we are in the post-pandemic recovery," said one source.

The timing of that recovery is still in flux as Canada awaits shipments of vaccines, and while severe outbreaks continue to plague many parts of the country.

It's also not clear how much room Freeland still has to add to the country's deficit.

Running out of road?

In September, the parliamentary budget officer pegged this year's deficit at $328 billion — and that's without factoring in the extension of the emergency wage subsidy and revamped rent relief program that became law just last week, or the top-up to the interest-free loans available for businesses.

Still, the sources suggest the update will include assistance not only for the airlines, hotels and restaurants that have lost business, but for their suppliers as well.

Freeland also is expected to earmark funds to help meet the commitment in the throne speech to set national standards for long-term care facilities — which accounted for nearly 80 per cent of the deaths in the pandemic's first wave.

"We can't be going through the same sort of carnage we went through in long-term care in the second wave that we did in the first wave," said another source. "That would be irresponsible."

A health care worker wearing personal protective equipment works with a resident on a balcony at the Laurier Manor in Ottawa on April 26, 2020. The long-term care facility was experiencing an outbreak of COVID-19 at the time. (Justin Tang/Canadian Press)

Those sources suggest there will be a down-payment on efforts to help women in the workforce — people who were more likely to lose their jobs to the pandemic "she-cession" and less likely to return to work following the first wave.

There could also be money to help families cover one-time expenses they incurred when schools shut down — things like laptop purchases and additional expenses associated with online classes.

"These are short-term costs," one source cautioned. "It's not a long-term commitment to increase the availability of child care across the country."

Economist Armine Yalnizian has written extensively on the impact the pandemic has had on women. In the Financial Post last month, she argued that a lack of child care is "the policy chokepoint of a she-covery."

"There will be no recovery without a she-covery, and no she-covery without child care," she wrote. "The sooner we accept the simple facts of pandemic economics, the sooner we can stop making things worse than they need be."

Hyder said that while business leaders aren't opposed to more spending, he wants to see some commitment from the federal government to start balancing budgets again — to signal to financial markets and investors that this country is on a sustainable path.

"This country has 37 million people. The population is aging dramatically. Trade patterns are changing. Our economy is heavily dependent on natural resources," he said. "The question being asked is, 'How are you going to pay this all back?'"

That answer likely will have to wait until the full budget next spring. In the meantime, Freeland and her cabinet colleagues seem willing to spend whatever they think the country needs to deal with the pandemic's second wave.


Chris Hall

Former National Affairs Editor

Now retired, Chris Hall was the CBC's national affairs editor and host of The House on CBC Radio, based in the Parliamentary Bureau in Ottawa. He began his reporting career with the Ottawa Citizen before moving to CBC Radio in 1992, where he worked as a national radio reporter in Toronto, Halifax and St. John's. He returned to Ottawa and the Hill in 1998.

With files from David Cochrane

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