Ottawa/Surrey (with files from CP/MSN/SBOT/CTP) – The Trudeau Liberals say they expect nearly two million Canadians to remain without jobs this year as the COVID-19 pandemic drags down the domestic economy and federal aid sends the deficit to a historic $343.2 billion.
The economic and fiscal “snapshot” from the government today lays out the Liberals’ belief that there will be a slow return to a new normal, with unemployment high and economic growth low through to at least the end of 2021.
Even though the government believes the worst of the economic harm from the pandemic is behind the country, the document says a recovery can’t begin in earnest until an effective vaccine or treatment becomes widely available.
The document tries to make that case, saying that the $80-billion Canada Emergency Response Benefit, which had paid out $53.5 billion in benefits as of late June, has covered Canadians’ estimated $44.6 billion in lost labour income through the first half of the year.
The $2,000-a-month benefit is estimated to have covered the monthly housing, food, phone and internet costs for the bottom and middle thirds of households, according to Finance Department calculations.
Historically low interest rates mean all the hundreds of billions in borrowing comes with “manageable” costs, Trudeau said, and the alternative would be for individuals and households to load up with debt themselves to cope with months of no or little work.
Adding to the deficit is a $37.3 billion boost to the federal wage subsidy program to bring its budget to $82.3 billion, signalling an expansion and coming changes to the benefit that covers up to 75 per cent of wages to a maximum of $847 a week for eligible companies.
Surrey Board of Trade Calls for Infrastructure and Workforce Investments to Help Counter Federal Deficit
Today, Canada’s Finance Minister Bill Morneau provided the federal fiscal snapshot. It was forecasted that the deficit is estimated at $343.2 billion as a result of reduced revenues due to the economic shut down and additional, unexpected stimulus spending to support residents and businesses. This snapshot is based on a private sector forecast and alternative scenarios were presented.
Highlights of the snapshot include:
· Deficit: $343.2 billion
· Debt: $1.2 trillion
· Debt to GDP: 30.1% last year, which was very good compared to other G7; now at 49%
· Debt management plan: Lock in as much of the debt at a low rate for as long as it can. Higher percentage of government bonds for a long period of time, keeping cost servicing (interest paid per year) lower.
The Federal Government will not increase taxes. They also indicated there will be a $14 billion safe re-start agreement with Provinces and Territories to ensure a safe, sufficient supply of childcare, and to build capacity to test and trace COVID-19.
Aside from the pandemic program spending, the economic slowdown is estimated to have added another $81.3 billion to the deficit in 2020-21. The Canadian economy is projected to shrink by 6.8% this year before bouncing back by 5.5 % next year, assuming the pandemic crisis does not become worse again. This could be the worst economic contraction since the Great Depression.
“Many jobs are not returning especially for tourism/hospitality, retail, restaurants, and other small businesses. It is time to pivot and commit to infrastructure (transportation, energy, resources) and workforce investments collaborating with educational institutions across Canada to instigate economic activity,” said Anita Huberman, CEO of the Surrey Board of Trade. “Many industries such as manufacturing, technology, and healthcare have indicated a skills gap for years. It is time for structured, sustainable, and ongoing investments into upskilling and reskilling.”
A focus on growth, resilience, and opportunity for those affected and building a green economy was mentioned by Minister Morneau.
“When examining the overall debt to GDP ratio, we are on par or better off than many other countries affected by the pandemic. Though the Federal Government has been doing a phenomenal job protecting and providing for Canadians, there needs to be a path forward towards reviving Canada’s economy.”
Taxpayers Federation sounding the alarm as federal debt nears $1,000,000,000,000
Canadian Taxpayers Federation Federal Director Aaron Wudrick released the following statement in response to today’s federal economic and fiscal snapshot:
“The federal debt is about to hit $1,000,000,000,000, according the federal fiscal update, and Canadians should be alarmed.
“Unfortunately, Ottawa doesn’t seem to have a plan to manage this deep dive into debt. For all the specifics he provided today, Finance Minister Bill Morneau may as well have posted a picture on Instagram.
“Pandemic-related spending has caused the deficit to balloon by more than one thousand per cent in just four months. Much of this spending was intended to temporarily address the COVID-19 crisis, but these programs are extremely expensive and unsustainable. Minister Morneau needs to lay out a plan to turn off the taps, but he failed to do that.
“In particular, it is clear that the government must either end or significantly reform the Canada Emergency Response Benefit which creates a strong unintended incentive for people to stay out of the workforce.
“We call on Minister Morneau to commit to providing a more comprehensive fiscal update and budget.”
Chilliwack-Hope MP Strahl responds to Trudeau Liberal Economic and Fiscal ‘Snapshot’
Mark Strahl, Member of Parliament for Chilliwack—Hope is responding to Liberal Prime Minister Justin Trudeau and Finance Minister Bill Morneau’s Economic and Fiscal ‘Snapshot’.
Today, Finance Minister Morneau tabled the government’s Economic and Fiscal ‘Snapshot’. The Finance Minister confirmed that the Liberals are running a deficit of $343.2 billion this year, and for the first time the net federal debt will reach over $1 trillion this year.
“Conservatives supported the emergency benefits that Canadians needed to get through the early stages of this global pandemic, but now is the time for a clear, forward-looking plan that will transition us from emergency response to economic recovery,” said MP Strahl. “We didn’t get that today.”
“Justin Trudeau has no plan to help Canadians get back to work or to restart our economy, said MP Strahl. “Under Justin Trudeau’s watch, Canada is falling behind. We have the highest unemployment rate in the G7. We are the only G7 country to have lost its AAA credit rating and we are the only G7 country without a recovery plan.”
Unlike in previous years, the government refused to provide at least a 5-year forecast.
The ‘snapshot’ also shows, for this year alone, a revenue loss of $71.1 billion, spending increases of $236.9 billion, and that the federal debt has increased to 49.1 per cent of GDP.
The Liberal government has included an additional $15 million for the Deputy Prime Minister’s office budget but failed to include any new funding for the Auditor General’s Office to provide oversight of the government’s unprecedented spending.
“Over the past five years, the Trudeau Liberals have completely abandoned their fiscal anchors,” continued MP Strahl. “Today was an opportunity to reverse course and put Canadians first. Instead, Justin Trudeau once again put Liberals first.”
“Conservatives know that to be competitive, we need to unleash the power of the private sector. Help Canadians get back to work. Support small businesses. Lower taxes, cut red tape and make Canada an attractive place to do business once again.”
Conservatives will continue to fight to get the Canadians the help they need, and we will continue to call on the Trudeau government to put forward a transparent plan to guide Canada’s recovery,” concluded MP Strahl.