The federal government promised billions more in spending to help Canada get through the COVID-19 pandemic and to begin the lay the groundwork for a recovery in its fall economic statement Monday.
Some of Monday’s announcements were expansions or extensions of existing programs, such as the Canada Emergency Wage Supplement, which was put back to the 75 per cent maximum rate for the period beginning December 20 until March 13. That supplement provides up to 75 per cent of wage support for businesses who retain and continue to pay employees despite seeing revenue decline due to the COVID-19 pandemic.
Other promises included increased investments in testing and tracing PPE and vaccine development along with what the federal government is calling a “down payment” on a post-COVID-19 recovery.
Combined with existing measures, the Trudeau Liberals’ pandemic support and recovery plan is the largest spend the country has seen since the Second World War.
Comparing the current new wave of COVID-19 cases sweeping across Canada to a long winter and next year’s promised early vaccine candidates and hopeful pandemic recovery a dawning spring, Deputy Prime Minister and Finance Minister Chrystia Freeland said the federal government’s “priority continues to be fighting COVID-19 and protecting Canadians’ health and safety.”
The update highlighted the work so far and set out more spending to come. Since March, the federal government has been behind the vast majority of fiscal supports and tax deferments put in place. They boasted Monday that they had “effectively managed to stabilize the economy,” and said that almost 80 per cent of jobs lost at the start of the COVID-19 outbreak have been recouped and the level of bankruptcies is below pre-pandemic levels.
Freeland warned, though, that the government can’t take its foot off the gas yet.
“The coming months will be difficult and ongoing fiscal support will remain necessary deep into 2021 in order to protect jobs and prevent widespread permanent losses in our economy,” the government said in a press release.
Freeland also announced a spending plan of &70-$100 billion — or three to four per cent of the nation’s GDP — to stimulate the economy once COVID-19 is conquered.
While details of what that will look like will be unveiled at a later date, Freeland said the spending will include “time-limited” investments building a greener, more inclusive, more innovative and more competitive economy.
Those measures, she said, will include work on a Canada-wide early learning and child care system, programs to support a green transformation and net-zero emission future and initiatives to address systemic racism.
Freeland presented no plan to balance the budget, but defended the spending, arguing that Canada’s debt-to-GDP ratio, which remains the lowest in the G7, and historic low borrowing rate means “debt is affordable now and will be for future generations.”
Debt servicing costs right now, the update said, relative to the economy, are at a 100-year low.
“From the onset of COVID-19, our government has done everything in our power to combat the virus and mitigate its harm, using every tool available,” Freeland said.
“Eight of every ten dollars spent in Canada to fight the virus and support Canadians has been spent by the federal government”
Freeland said that support to date includes $322 billion in direct measures to fight the virus and $85 billion in tax and duty deferrals.
“The risk of providing too little support now outweighs that of providing too much,” Freeland said.
“We will not repeat the mistakes of the years following the Great Recession of 2008.”
The update itself said the bailout package planned would be “broadly comparable” to those planned by international peers, and would be larger than the investments made in 2008-09, which accounted for about 2.5 per cent of the GDP at that time.
“This recession is worse than 2008. It stands to reason we will need to invest more, not less,” the document reads.
But not everyone sees it that way. The Canadian Taxpayers Federation (CTF) warned that the update means a debt of $1 trillion within weeks, what they called a “sadly historic milestone.”
“It’s inexcusable that the Trudeau government has gone more than 20 months without so much as presenting a budget because Canadians deserve a credible plan to get runaway spending under control,” CTF federal director Aaron Wudrick said.
CTF argued that Canada’s deficit was already projected to grow more than any other G20 country citing a National Bank analysis. The CTF also criticized the plan to direct $100 billion in stimulus funding after the economy begins a recovery.
“Alarmingly, there are no fiscal targets, and the government actually pledged to add another $100 billion in debt after the pandemic ends, effectively committing to spend money before it even knows what to spend it on,” said Wudrick. “There doesn’t seem to be any place where the Trudeau government has even tried to save money and there’s no tax relief. A pandemic isn’t a free pass to cynically increase spending on everything, especially when taxpayers are struggling.”
The federal government said in its document that the spending will include “guardrails” based on financial and economic indicators to determine how to spend and on what. They also said spending will be dependent on how fast the virus can be brought under control and how widespread use is of relief measures before the stimulus begins.
CUPE, meanwhile, thought the Liberal plan didn’t go far enough. They argued that child care, pharmacare and long-term care improvements should have received more funding in the fall update.
“The Liberal government is stalling its own signature promises on child care, pharmacare, and long-term care, leaving vulnerable Canadians to continue waiting for much-needed help in the middle of a global pandemic,” CUPE said in a press release.
“While the government was expected to use Monday’s Fall Economic Statement to chart a course to meet these promises announced in the September throne speech, Finance Minister Chrystia Freeland only offered Canadians more delays and more disappointment.”
CUPE national secretary-treasurer Charles Fleury accused the Liberals of gong nothing but making “empty gestures” and kicking the promised reforms further down the road.
CUPE, though, did praise promised measures that would make Amazon and Airbnb pay their share in HST and GST, and limit some CEO stock options.
The Western Canadian Wheat Growers, meanwhile, felt left out of the spending plan, accusing the federal government of forgetting their priorities.
They said that at the very least, the update should have voiced support for grain farmers and acting to ensure rail blockades would be immediately dealt with. They also criticized the previously-announced support for supply management, without any monetary support for the grain and oilseed sector.
The grain farmers’ organization said its sector has lost $4 billion due to non-tariff trade barriers and “political missteps.”
“We have many concerns with what the green transformation will actually mean to grain farmers. We have been embracing new technology and carbon sequestering for decades and the government gives us zero credit for our work. They refuse to recognize the impact of their decisions or even consult with us on future policy,” said Jeff Bennett, Saskatchewan Director.
The Canadian Federation of Independent Business (CFIB) found fault and favour with the update. They praised the increase in the wage subsidy for the hardest-hit small firms and the extension of the wage and rent subsidies, as well as the emergency loan program.
The CFIB, though, had wanted further fixes for new businesses and self-employed Canadians, who have been left out of most key support programs. And while they support the increase of the wage subsidy back to the 75 per cent mark, they pointed out that a firm must have a 70 per cent loss in revenue to qualify for the top dollar top-up, compared to 30 per cent in the spring.
They were also hoping for a delay to the upcoming CPP premium increase and the planned increase in the federal carbon tax.
“. Delaying these tax increases should be a priority in the days ahead,” president Dan Kelly said. “CFIB stands ready to work with the federal government to ensure all small firms can access the economic supports they need to get to the other side of the pandemic.”
The opposition Conservatives welcomed the top-up for recipients of the Canada Child Benefit, something O’Toole promised in his leadership campaign. They criticized the new spending without fixing what they called existing “failures,” and criticized what they saw as a lack of a plan to get Canadians vaccinated before September.
But while some countries may have select vaccines first, leaving Canada waiting as other countries begin COVID-19 inoculations, Monday’s document argues that overall, Canada has the best supply.
The government pointed out that if you add up all of the vaccine agreements signed, Canada has secured a supply of up to 429 million doses of seven current candidates. It’s the most diverse vaccine portfolio of any country. They said that once the vaccines are available, they’ll be distributed, with logistical help from the Canadian Forces, for free. The promised supply includes a range of vaccines from the mRNA treatments developed by Pfizer and Moderna to virus-like particle, viral vector and protein subunit vaccines being developed by companies such as Medicago, AstraZeneca, Johnson & Johnson and Novavax.
The supply is good enough for more than ten doses per Canadian, and since some vaccines might require more than one dosage to work, that could be crucial to keeping COVID-19 at bay.
Critics, though, have argued it’s speed — not quantity — the government should have been concerned with. And for many of those promised doses, Canada isn’t first on the list.
Some of the new measures announced Monday
The fall economic statement released by the federal government includes dozens of line items detailing new and old spending. Here are some of the new promises included in that list
Offsetting declines in Indigenous own-source revenues: $332.8 million in 2021-22
Innovative research and support for new testing approaches and technologies: $546 million, including $530 million in 2021-22
Supporting and sustaining the Public Health Agency of Canada and Health Canada’s Pandemic Operations: $803 million from 2020-21 to 2025-26, including $244 million in 2020-21, $538 million in 2021-22 and $5 million each year thereafter
Additional PPE procurement and support for the warehousing of PPE: $ 2.746 billion, including $1 billion in 2020-21 and $1.746 billion in 2021-22
GST/HST relief on face masks and face shields (medical and non-medical, would make federal tax on these items zero after December 6, 2020 until their use is no longer broadly recommended by public health officials): $95 million
Additional funding to prevent the spread of COVID-19 in shelters: $299 million in 2021-22
Further investments in long-term care (such as national standards of care and safe long-term care fund to help provinces and territories): $1.01 billion primarily split between 2020-21 and 2021-22
Supporting Canadians struggling with addiction: $66 million, including $21 million in 2020-21
Support for the Canadian Red Cross response and its civilian humanitarian workforce: $119 million
Further enhancing public health measures in Indigenous communities: $632 million including $537 million in 2020-21 and an additional $187 million for supportive care in Indigenous communities
Support for highly-affected sectors, including hospitality, arts and entertainment and air travel: details to be announced soon
Funding to support operational pressures resulting from COVID-19 in correctional institutions: $172 million
Funding to replace Parks Canada revenue: $54 million
Additional funding to support Indigenous Skills and Employment Training Program, Foreign Credential Recognition Program, Opportunities Fund for Persons with Disabilities and Women’s Employment Readiness Canada pilot project: $274.2 million over two years starting in 2021-22
Funding for community-led initiatives, municipalities and Indigenous communities to support anti-gang programming: $250 million over five years starting in 2021-22
Implement national body-worn camera program for frontline RCMP officers: $238.5 million over six years
Grants and energy assessments to help homeowners increase energy efficiency: $2.6 billion over seven years starting in 2020-21
Accelerated work to end long-term drinking water advisories in First Nations communities: $1.5 billion in 2020-21 and $114.1 million per year ongoing thereafter
Accelerate the commitment to close the infrastructure gap in Indigenous communities: $25.9 million
Support to implement the Gladue principles in the mainstream justice system and Indigenous-led responses to reduce the overrepresentation of Indigenous peoples in criminal justice and correctional systems: $49.3 million
Launch a comprehensive violence prevention strategy to expand access to a continuum of culturally-relevant supports for Indigenous women, children and LGBTQ and two-spirit people facing gender-based violence, including new shelters and transitional housing for Indigenous peoples on reserve, in the north and in urban areas: $724.1 million
Tax measures:
The federal government is proposing a variety of tax measures aimed at foreign companies selling digital products in the Canadian market who don’t currently charge HST/GST on purchases, such as digital products and services, app stores, goods located in Canadian fulfillment warehouses and short-term rentals.
The changes are expected to “level the playing field” for Canadian businesses while adding $2.8 billion in revenue annually.
The update also announced that the federal government is exploring what they’re calling a “border carbon adjustment,” which charges a carbon fee on imports from countries that do not have a carbon tax so those products fact the same costs as those supplied by domestic producers that do face a carbon pricing scheme.
