The Morning Brief – 08.06.20

By Bruce Carson


COVID-19—Healthcare—Economic Renewal

The Government’s Agenda for the Rest of Summer through to the End of the Year

Matters for Prime Minister Trudeau to Contemplate during his Break Time

We have been told that Prime Minister Trudeau is taking some private time over the next week or so for a summer break. This is probably a good idea if he uses the time productively. While he waits for the other shoe to fall in the WE Charity conflict of interest scandal which affects both him and his finance minister, such as the opposition finding something incriminating in the haystack of documents to be released, he needs to look ahead to the period between now and the end of the year.

There are a number of issues outside of the government’s COVID-19 response that need attention and then there are those directly related to it involving all aspects of healthcare and all of the elements involved in restarting the economy.

Political Scientist and Author Geoff Stevens in his weekly column that appears in the Waterloo Region Record last week set out a list of matters that need to be addressed.

In addition to dealing with the continuing saga of the WE Charity, he listed COVID-19 developing or securing an effective COVID vaccine, initiate additional relief programs and/or end or transform existing programs.

With regard to China the issue of the unlawful imprisonment of Michael Spavor and Michael Kovrig has to be addressed in some concrete way beyond the usual diplomatic nostrums that we have been receiving. If the government is not going to take the advice of 19 eminent Canadians contained in their letter to the prime minister, then what is the Trudeau government going to do. We are now beyond 600 days of their imprisonment in intolerable conditions and the Meng extradition process drags on. It was argued yesterday in an article in the National Post that this dispute with China over Meng’s extradition has led to delays in China delivering on a contract to supply COVID-19 vaccines for trial in Canada.

Also contained in Stevens list was a matter that may have to be addressed, being the current controversy with the Governor General. Hopefully the workplace issues will be resolved but if they do boil over again, it may lead to an uncomfortable discussion between Trudeau and the Governor General. Hopefully some see the irony in the hiring of a former manager from Cirque du Soleil as Chief of Staff and special advisor to the Governor General.

This list from Geoff Stevens can be broken down further perhaps into two groups; COVID-19 health and social issues and then COVID-19 economic issues.

COVID-19, Health and Social Issues

Under the heading of COVID-19 health and social issues we find the search for and the development of a vaccine or an effective therapeutic treatment. The federal government announced two initiatives yesterday dealing with vaccine development and deployment.

Two issues exposed by the pandemic relate to childcare and long term care homes. There needs to be a solution for childcare arrived at by the federal government and the provinces and territories. Rightly or wrongly this has been characterized as a women’s issue. But if women are to resume their rightful place in the workplace, this issue must be resolved.

In addition to the various studies of what went wrong in the long term care homes, a fix is necessary and it may involve getting rid of for profit homes, but a fix must occur quickly, as the second wave of the virus will be with us presumably in the fall.

Children must return to school safely in September and if that is not possible then alternatives must be found. This again becomes a joint fed-prov issue.

Governments at all levels must be vigilant in maintaining adequate stocks of all forms of PPEs.

The federal government along with provinces and territories entered into a $19 billion Safe Restart program that addresses a number of the issues set out above but its implementation cannot be left to chance. It must be supervised by representatives of the federal, provincial and territorial governments.

COVID-19, Economic Issues

The deficit and debt of the federal government are now at record levels due to government spending designed to keep Canadians, to the greatest extent possible, whole through the economic shutdown necessitated by the virus. To his credit, Trudeau acted quickly and for the most part effectively with the development and implementation of the CERB program.

The government has announced that it is transforming CERB so that it will become part of the Employment Insurance program. Also it has announced that contract workers and those in the gig economy will be covered.

It is unclear whether the changes announced to the wage subsidy program, making it more flexible, will also make it more effective in helping employers and employees. The Canadian Association of Petroleum Producers has expressed concern to the federal government that the measures, except perhaps the wage subsidy, put in place to help the energy sector have proved not to be helpful, particularly the Large Employers Emergency Financing Facility (LEEFF).

If the goal of these programs, especially LEEFF, was to provide liquidity, that has not occurred. The Q2 results from large energy companies demonstrate the need for liquidity.

Matters such as the move of CERB to EI, changes to the wage subsidy, liquidity programs for large corporations while necessary are only part of the economic issues that the federal government faces as Canada enters the recovery phase.

Economists and others who commented on the government’s fiscal snapshot were virtually unanimous in expressing the need for a budget to be presented in the fall.

This fall budget should set out the path to recovery and should be something Trudeau is thinking about now, along with officials at finance and the finance minister. They should be reviewing revenue projections, debt and deficit in the context of what new programs will be needed to boost the economy, not stall it.

The government has a fine line to walk between providing stimulus while at the same time ensuring debt and deficit do not grow exponentially.

The Parliamentary Budget Officer said during an interview last weekend that the deficit is manageable without tax increases if COVID measures are temporary. However, if programs are extended, or if Canada sees another year with a big, big deficit, it would be “much more problematic.” If this occurred the government would have to do something that is more sustainable over the long term which means cutting expenditures or raising taxes or a combination of both.

It is the opinion of the PBO that if Canada experiences a second wave the deficit would be much less manageable.

As the PBO explains, a budget would reveal whether the government plans to stimulate the economy or does it plan to return to a more normal level of deficit or balanced budgets.

While it determines which of a number of paths it could follow, the government will be helped by a full scale review of the federal tax regime to be carried out by the Canadian Chamber of Commerce. The report from this study is to be ready in the fall and should be useful in identifying measures to stimulate productivity and growth.

The fall budget will have to address federal spending on childcare, long term care, fighting the pandemic but also stimulate the economy so that Canadians have jobs and are able to contribute to the recovery.

There is a lot to be done regarding the COVID-19, health and social issue list as well as economic list. And if Canada is to experience success in its recovery from COVID-19 work must begin immediately with the government sharing its recovery plan with Canadians.

Prime Minister Trudeau will know that if his government falters in the recovery phase, a new Conservative Party leader will be quite willing and anxious to relieve him of this burden.

To Come

  • House of Commons Finance committee to meet on WE issues
August 7
  • Job numbers for July will be released
August 12
  • House of Commons resumes for one day
August 14
  • Monthly survey of manufacturing for June will be released
August 19
  • CPI numbers for July to be released
August 21
  • Retail trade numbers for June to be released
August 26
  • House of Commons resumes for one day
August 28
  • GDP numbers for June and Q2 to be released

The Morning Brief will return on Tuesday, August 18 after a summer break.

– BC