The Morning Brief – 06.17.20

By Bruce Carson


Economy—Extension of CERB for 8 Weeks

Need for a Fiscal Update

House of Commons Scrutiny of Supplementary Estimates (A) 2020-21: The Most Expensive Four Hours in Canadian Parliamentary History

Extension of the Canada Emergency Response Benefit (CERB)

It should have come as no surprise when Prime Minister Trudeau announced an eight week extension to the government’s most popular COVID-19 support program, CERB. Trudeau at virtually every appearance assures Canadians that his government has their backs and there are no cracks for them to fall through, because the government is there to paper over whatever cracks appear.

Whether this is or is not true regarding a number of the programs this government has announced, Trudeau made sure yesterday, that until the end of August, backs were covered by this extension.

Last week Jennifer Robson of Carleton University was quoted here as saying that unless the government moved to do something with CERB or adjust another program over two million Canadians would have been left without support.

The theory had been that as the economy awoke from its “coma” and as businesses reopened the wage assistance program would kick in to help those transferring from CERB. Two things have happened to make that not a viable assumption.

The economy has not recovered at the rate hoped for by the government and the wage supplement program which has to be applied for by employers has proved to be a lot less popular than anticipated. It has not proved to be the off-ramp from CERB that it was supposed to be. Therefore as Professor Robson notes without some action by the government over two million Canadians will be left without support.

The new form of CERB announced yesterday will contain an attestation clause whereby those applying say that they are looking for work or perhaps won’t refuse a job if one should be offered. There are no penalties attached as they were a week ago in the failed Bill C-17.

The cost is estimated to come in at $15 billion for each four week segment and presumably will diminish should the economy pick up and more Canadians return to work. Trudeau articulated the problem simply yesterday saying there are “more out of work Canadians than available jobs.”

The government having kicked the issue of Canadians being left without support down the road for two months, must use that time productively to develop a solution by the end of August.

Janice MacKinnon, former Saskatchewan Finance Minister tackled this problem in a recent note she wrote for the C.D. Howe Institute entitled “CERB-Reform or Replace.” She set out two paths; either CERB is reformed to deal with its shortcomings and continues or existing programs could be expanded and made flexible to meet the needs of displaced workers.

Her view is that “a phase out of CERB seems the sensible course.” She believes other programs can provide more targeted assistance.

She sees the Canada Workers Benefit as helpful should it be ramped up as it tops up employment income through a tax credit for low income earners. She also suggests that training programs be expanded to serve growing economic sectors.

Regardless of whether the government adopts MacKinnon’s solution, a solution must be found by mid-August as continuing CERB as is, is not sustainable. If the federal government wants to use it as a basic income program then discussions with provinces should start now regarding implementation of that idea.

Fiscal Update

This has become a running debate between the government and two opposition parties, Conservative Party and the Bloc and a number of economists. The prime minister claims “there are so many things we simply don’t know” that any fiscal update would be an “exercise in invention and imagination.”

On CBC’s The House last Saturday Kevin Page stated bluntly that there is no good reason to withhold a fiscal update. “Economic uncertainty is not an excuse” said Page. Looking at other jurisdictions Page noted that New Zealand presented a budget in May and the UK has been providing monthly updates of spending after presenting a budget in March.

Yesterday, at the House of Commons Finance Committee Tiff Macklem, the new Governor of the Bank of Canada said “the July Monetary Policy Report will provide an updated assessment of the outlook for output and inflation. Given the unknown course of the pandemic, expect this will be more of a scenario than a forecast and will also involve a discussion of key risks.”

Surely if the Bank of Canada can provide scenarios and risk assessments in its July Monetary Policy Report, the federal finance department can provide a fiscal update.

As Page says “economic uncertainty is not an excuse.”

Supplementary Estimates (A) 2020-21

The four hour session of the House of Commons which takes place today, dealing with the estimates has been described as the most expensive four hours in Canadian Parliamentary history.

Cramming the scrutiny of $87 billion of government spending into four hours was part of the deal struck between the NDP and the Liberals which also continued the COVID-19 Committee of the Whole instead of resuming sittings of the House in accordance with the Parliamentary Calendar.

The NDP’s price for this agreement was that the government pursue the provision of two weeks of paid sick leave with the provinces. As someone pointed out yesterday no government of whatever stripe wants more scrutiny of its activities and when it is offered the opportunity to basically escape scrutiny of its spending in the middle of a pandemic, it was too good an offer for the Liberal government to turn down.

Hopefully when today is over NDP leader Singh will understand that he frittered away the opportunity to hold the government to account for its spending, historically the main role of the Commons and particularly crucial in a minority parliament.

In a note released yesterday the Parliamentary Budget Officer described the differences between today’s procedure and the normal way that government spending is dealt with. Normally estimates are dealt with in the relevant standing House committee where the committee has the power to oppose, reduce or deny the spending, it cannot increase spending. Witnesses may be summoned to explain specific aspects of the estimates.

The process today is limited to four hours with a vote held immediately thereafter and it is to approve the estimates as tabled or reject them.

With the NDP onside as a result of the bargain it struck and as the Liberals will be extending CERB for eight weeks, the government will only fall by accident, which today is unlikely.

What Mr. Singh seems to have forgotten when he made his deal with the Liberals is that this is a minority parliament where committees are controlled by the opposition. Scrutiny of government spending in committee in a minority should not have been bargained away.

To Come

  • House of Commons deals with spending estimates
  • Vote in the UN regarding seats on the Security Council
  • CPI numbers for May to be released
  • Conservative Party leadership debates-French
June 18
  • Conservative Party Leadership debates -English
  • First Ministers Meeting
  • Wholesale trade numbers for April to be released
  • OPEC monitoring panel to meet
  • Bank of Canada Deputy Governor Laurence Schembri delivers a speech to the Greater Saskatoon Chamber of Commerce
June 19
  • Retail trade numbers for April to be released
June 22
  • Bank of Canada Governor Macklem delivers a speech to Canadian Clubs and Cercles canadiens, Ottawa

The Morning Brief takes a short break, returning on Tuesday, June 23.

– BC