The Morning Brief – 06.09.20
By Bruce Carson
Economy—The Path Towards Recovery
Who will benefit from the Recovery?
How long until Canada moves beyond Recovery?
Last Thursday, Prime Minister Trudeau during his weekly call with premiers spoke to them about economic recovery and offered some financial help. Premiers, always eager to receive federal financial aid, something near the top of their list of demands, were not as happy when they discovered the cash had strings attached. It was to be funneled into priorities which may or may not be shared among the leaders.
Then on Friday, Statistics Canada released job numbers which quite frankly surprised most observers and the discussion began about whether we might have the beginnings of an economic recovery in front of us and the question becomes what kind of recovery and who will benefit? Will the recovery stretch across the whole economy.
So backing up to the First Ministers call on Thursday, the discussion focussed on the $14 billion on offer and how it was to be spent. Prime Minister Trudeau said about the offer “the provinces and I will work for a safe restart agreement which would cover the next critical 6 to 8 months.”
“With this safe restart agreement, we’re proposing a standard of support to keep every Canadian right across the country safe and healthy as we get our country back on their feet.”
The money would be designated for PPEs; additional childcare services; offering up to 10 days paid sick leave, where benefits don’t exist; immediate assistance for seniors and vulnerable populations who are most at risk of contracting COVID-19. There would also be money for infrastructure and community programs, including public transit for municipalities.
In other words, the funds are targeted and an agreement is required before the cheque is cut.
Premier Ford said that Ontario has a $23 billion problem and $14 billion for all of Canada “won’t cut it.” He also said that Ontario was not interested in the ten sick day’s proposal.
Premier Legault said he would be interested if there were no strings attached. He wants to see the $14 billion distributed according to the number of COVID-19 cases, rather than per capita.
We have now reached the first point of real disagreement between the prime minister and the premiers. The money would be nice, not enough, but with federal strings attached.
Trudeau has said that last Thursday was the beginning of negotiations about cash to the provinces to aid in recovery.
Then came the job numbers last Friday and it looked like Canada’s economy was on the march to recovery.
In May, 290,000 jobs were created, or put another way, some of the jobs that were lost since mid-March came back. Three quarters of these jobs were full time, but the unemployment rate climbed to new heights. It is now 13.7% as more Canadians are seeking jobs.
In March and April, three million jobs were lost.
When the numbers of those who gained jobs was set out by gender, men gained 206,000 jobs while women gained only 84,000 jobs. This creates a challenge for policy makers to ensure that there is gender equality in the recovery; it can’t be done without addressing the need for supports such as child care.
Kevin Carmichael, commenting on the job numbers said that “sudden economic calamities must be met with overwhelming force, lest you get stuck with an underwhelming recovery.”
Carmichael spoke of the federal Industry Strategy Council which is co-chaired by Navdeep Bains and Monique Leroux, formerly of the Desjardins Group which is to recommend policies for the recovery. Leroux in an interview spoke about the fact this situation “creates an opportunity to do things differently.” She believes government procurement could be a powerful tool, boosting companies.
The Canadian Chamber of Commerce last week, set out a “Roadmap to Recovery” with some key challenges as it believes we are now in a transitional phase. This means living with the virus in our midst and managing the risks.
Recovery says the Chamber, is to be gender inclusive, environmentally responsible, and innovative.
It sees some of the challenges as getting Canadians back to work; keeping supply chains and people moving; managing debt and deficits; navigating global fragmentation; adopting technology and innovation; ensuring a vibrant resource sector; planning for SMEs business continuity; strengthening our global health infrastructure ; and rethink government’s role and priorities in the economy.
Nothing listed above is going to be easy, particularly when one considers the World Bank’s report released yesterday which predicts the worst recession in eighty years. This is the first recession triggered by a pandemic since 1870.
Global GDP is likely to shrink 5.22% in 2020. It could push 70 to 100 million into extreme poverty. The recession could be longer than initially forecast if getting the pandemic under control takes longer than anticipated.
Parliament will be dealing with Bill C-17 this week which is designed to move workers off the safety blanket of CERB onto the wage subsidy program by reducing the CERB benefits and marrying the benefits to looking for work, not required, but necessary in order to keep receiving benefits.
The government which is spending $83.6 billion on CERB per week needs to incentivise Canadians to move to the wage subsidy program and one way to do that is to wean them off CERB.
The government may have a tough time doing this as two opposition parties; The Conservatives and the Bloc are not fussy about the fact that the House of Commons has become a Committee of the Whole dealing mainly with COVID-19. No doubt Bill C-17 will receive rough passage but at some point the government largesse must come to an end.
The Trudeau government cannot continue to be all things to all Canadians.
- Funeral for George Floyd this afternoon
Today & Tomorrow
- U.S. Fed meets
- Monthly survey of manufacturing for April to be released
- Possible voting day for the UN Security Council seat
Not sure about tomorrow morning, may be a game time decision.