As provinces begin gradually to reopen their economies, the federal government is pleading with Canadians to continue respecting pandemic measures — while the opposition Conservatives are warning that federal emergency aid could discourage some people from going back to work.
Conservative Leader Andrew Scheer said today that flaws in government support programs could “derail” provincial efforts to get the country’s economy back on track after widespread business shutdowns driven by COVID-19.
He said the Canada emergency response benefit (CERB) and the student financial aid program offer incentives for people to stay home rather than return to work.
“At a time when our economy needs stimulus, Justin Trudeau has given it a tranquilizer and risks creating labour shortages across the country. This failure must be reversed before it is too late. Canada’s economic recovery depends on it,” Scheer said.
Canadians are disqualified from receiving the Canada emergency response benefit (CERB) or student emergency aid if they earn more than $1,000 a month, and most benefits are available for several months.
Scheer said that as businesses slowly start to reopen, their employees are being forced to choose between taking shifts and keeping their benefits. CERB was designed to cushion COVID-19’s impact but it is now threatening to impede an economic recovery, he said.
Scheer said the programs must be made more flexible to encourage people to return to work. He called for a progressive, graduated formula allowing claimants to collect a portion of the benefit while working more hours to earn an amount greater than $1,000.
Watch: Andrew Scheer says federal benefits could lead to labour gaps
“A gradual phase out of the benefit as people earn more and more, we believe, would encourage and incentivize people to re-enter the workforce. It would help small businesses get the labour that they will need to restart their businesses without having to force people to choose between the risk of going back to work and losing their entire benefit,” he said.
To date, more than 7.3 million Canadians have applied for CERB. Another 96,000 employers have applied for the 75 per cent wage subsidy to cover about 1.7 million workers. Another 518,000 businesses have applied for $40,000 government-backed loans to stay afloat through the global pandemic.
‘We’re not there yet’: PM
Asked if the government would consider changing the benefits package, Trudeau said he’s looking forward to scaling back benefits and helping people get back to work — but “we’re not there yet.”
“We’re very much still trying to make sure people are getting the support they need, even as the economy is starting to gradually reopen. Our focus is on keeping people safe and ensuring they have the ability to stay home and pay for groceries, pay their rents and support each other,” he said.
“Obviously, a lot of thought is going into the various steps that are going to be needed as we get people out of their homes and back to work, but for now we’re still very much focused on how we help people through this.”
Watch: Justin Trudeau says focus remains on keeping Canadians safe
Canada’s Chief Public Health Officer Dr. Theresa Tam said today that COVID-19 is something Canadians will have to cope with until there’s a vaccine.
“This means physical distancing, hand hygiene and cough etiquette must continue everywhere. And although we’ll be getting out of our homes more and more, it will be vitally important that at the slightest sign of symptoms we stay home to save lives,” she said.
“Working while sick can no longer be a thing. As we move through the weeks ahead, let’s not forget we are all in this together and we will work our way through it with good science, strong evidence, careful steps and a shared goal to succeed despite the hardships.”
Health Minister Patty Hajdu also cautioned against easing back on restrictions too quickly, pointing out that there is not yet widespread immunity to the novel coronavirus.
“I think the first thing that Canadians need to remember is it’s not over,” she said. “It is a cautious reopening in certain provinces, in certain sectors, but that the new normal will have to include new ways of living, new ways of working that will protect us in this unique and difficult time.”
Watch: Patty Hajdu cautions that ‘it’s not over’
In an interview with CBC News Network’s Power & Politics last week, Manitoba Premier Brian Pallister suggested that federal benefits could have “perverse potential outcomes” or “unintended consequences” by encouraging people to stay home.
“I’m not discounting the need for people to get supports and I have thanked very publicly … the federal government for introducing these programs. But I am cognizant of the real, potentially dangerous consequences of rewarding people for not looking for work,” he told host Vassy Kapelos.
“We have lots of opportunities in our province and I have encouraged people, and I will encourage them, to seize those because I know that our small business community is anxious to get back open and anxious to employ people as they do that.”
Provinces are gradually allowing some businesses and services to reopen. Some services in Ontario reopened today and Premier Doug Ford said the province may be “getting close” to opening parks and more curbside pick-up retail options.
Final roundtable: Clean economy projects could create 670000 jobs per year – Corporate Knights Magazine
The COVID-19 pandemic represents an opportunity to “reposition” the Canadian economy to take full advantage of the low-carbon transition, the new chair of the Canada Infrastructure Bank said June 3.
The economic crisis resulting from the pandemic has forced corporations and governments to deviate from their standard operating procedures, opening up an opportunity for innovation and creativity, said Michael Sabia, who was recently appointed by the federal government to head up the infrastructure bank.
“We need to seize this moment to be creative about how we reposition the national economy for a world that is going to be different, and a very important part of that [effort] is repositioning our economy to be a significantly lower carbon economy,” Sabia told a virtual roundtable hosted by Corporate Knights.
Sabia said that there is plenty of potential for the Canada Infrastructure Bank (CIB) to participate in clean energy projects but that the federal Crown corporation has underperformed to date.
The CIB has a mandate to invest $35 billion in federal funding by 2027/28 but has been criticized for its slow start.
Sabia said the bank should focus less on traditional infrastructure like roads and ports and more on stimulus projects that accelerate the energy transition, including renewable power, interprovincial transmission, low-carbon transportation and digitalization efforts to ensure all Canadians have access to high-speed internet.
The Corporate Knights roundtable was part of its seven-part Building Back Better project that urged the Liberal government to ensure that any economic recovery plan have a climate-change focus.
Addressing the roundtable, Industry Minister Navdeep Bains said Canada will have to be innovative in responding to the COVID-19 pandemic and the climate crisis.
He said hundreds of Canadian businesses have responded to the need for medical equipment by changing their operations to produce new products. “That’s the same mindset we have to have when it comes to confronting the climate crisis.”
In a white paper released Wednesday, authors Ralph Torrie, Céline Bak and Toby Heaps said the federal government should allocate $106 billion over the next 10 years for a host of clean energy projects that would create the equivalent of 670,000 full-time jobs per year. More than a third of the federal government investment, $40 billion, would be frontloaded in the first two years (with half dedicated to grants to finance a green renovation wave). Over 10 years, the white paper estimates, the federal investment and complementary policies would crowd in a further $730 billion in mostly private sector investment.
All told, the investments would reduce greenhouse (GHG) emissions by 236 megatonnes annually by 2030, from 2018 levels of 729 megatonnes. That scale of GHG reductions would put the country on track to meet the Liberal government’s target of net-zero emissions by 2050, Bak told the roundtable.
Proposals have included support for a major retrofit program to improve energy efficiency in buildings, planting an additional 800 million trees a year for 10 years, and investments in coast-to-coast electric-vehicle (EV) infrastructure, as well as interprovincial transmission lines to deliver low-carbon electricity and a $40 billion Energy and EV Innovation Fund to help create Canadian champions in fast-growing low-carbon markets where Canada has strong assets, including bitumen-derived carbon fibres, green hydrogen, renewable jet fuels, batteries and EVs.
Other speakers suggested that a green stimulus plan should have goals beyond job creation and emission reductions.
Canadians are now confronting a triple whammy of the COVID-19 pandemic, the climate crisis and the vivid reminder of the systemic racism embedded in the country’s attitudes and institutions, said Catherine Abreu, executive director of Climate Action Network Canada.
Any green stimulus programs must be based on a “just recovery” Abreu said. Her group was one of 150 civil society organizations that released a document this week proposing “Six Principles for a Just Recovery” for a more equitable and sustainable future.
“This moment is forcing us into confrontation with the vulnerabilities that are built into our economic and social systems,” she said. “There are ongoing crises that lurk behind the current health and economic emergencies . . . So if we are going to tackle issues like climate change, we have to come at them fundamentally as a fight for justice.”
The federal government can pursue reconciliation with Indigenous communities by partnering with them on clean energy projects that deliver health, economic and social benefits to the people, said Terri Lynn Morrison of the Indigenous Clean Energy network.
Morrison said Indigenous people are already major developers and partners in clean energy projects across the country. “They’re ready to seize the opportunity,” she added.
Some economists have questioned whether stimulus spending on clean energy infrastructure is the optimal way to respond to an economic slump precipitated by a health crisis that has forced Canadians into social isolation. Sectors like retail, restaurants and tourism have been hit hardest with job losses, and it’s not clear they would benefit from traditional – or even non-traditional – stimulus spending.
In a blog post last month, economists Dale Beugin and Mike Moffatt argued that green stimulus spending should target areas such as infrastructure, while government should continue to rely on regulation and carbon price to drive climate policy.
Trying to meet the requirements of both recovery and emissions reductions would result in an approach that fails to do either efficiently, they argued.
“Climate considerations should be less constraint and more a radar to help identify non-traditional but job-rich investment opportunities, such as deep retrofits and flood protection for homes and workplaces,” Heaps said via email. “Climate can also be a tiebreaker where two recovery options offer similar economic benefits.”
“In addition to the large investments in green infrastructure, the ‘shecovery’ will likely require significant investments in eldercare and childcare,” he added.
During the roundtable, Ivey Foundation president Bruce Lourie noted that countries like Germany and South Korea have succeeded in providing support for key clean energy sectors. The refrain that “governments shouldn’t pick winners” is a “tired and misguided refrain for us to be using,” he said.
As an example, he cited the promising opportunities for Canada to be a global leader in the emerging market for hydrogen-powered buses and trucks.
Environmental economist David Sawyer said proponents of green stimulus plans should emphasize “co-benefits” that come with investment in emission-reduction projects. They can include not only more jobs but also health benefits from reduced fossil-fuel pollution and greater resiliency to withstand the severe weather impacts of the climate crisis.
Dianne Saxe, Ontario’s former environment commissioner, said Canada needs to find a way to maintain long-term climate-change policies so businesses and consumers have confidence that investments made today are not undermined tomorrow.
“The biggest challenge is how to have stable policies that survive government changes,” she told the roundtable. Canadians need to be active, she said. “Fundamentally, to get durable public policy, we need strong, loud public demand for it.”
Eurozone in fresh emergency action to boost economy – BBC News
The European Central Bank has taken further dramatic measures try to boost the eurozone economies, amid their biggest recession since World War Two.
Just months after emergency measures, the central bank said it would increase the size of its bond buying programme by €600bn (£546bn) to €1.35tn.
The programme will run until June 2021, six months longer than planned.
The move will keep borrowing costs low for countries and firms as they face huge budget deficits and recessions.
The purchases support “funding conditions in the real economy, especially for businesses and households,” the ECB said.
The central bank also decided to hold its interest rates at record lows.
The extra bond buying “is likely to push European government bond yields even further into negative territory, and investors in search of positive returns will be forced to take more risk,” said Rachel Winter, associate investment director at investment firm Killik & Co.
The bond purchases are often referred to as Quantitative Easing (QE). When central banks buy bonds with printed money, the value of the bonds rise and borrowing costs drop.
Some market commentators wonder how much money can safely be printed without causing the value of money to decrease.
“Although inflation is currently very low, these levels of asset purchases are causing some concern about inflation further down the line,” said Ms Winter.
“Economic theory tells us that that inflation is linked to the supply of money in the economy, and if the money supply is being drastically increased to fund quantitative easing then long-term inflation ought to rise too. These fears of long-term inflation have stoked demand for gold recently.”
Gold is trading at about $1,717 (£1,368) an ounce, down from highs of $1,766 earlier in the month, but up compared to a price of $1,324 one year ago.
In many ways, the ECB is playing catch-up with other central banks, said Neil Williams, senior economic adviser at US-based money manager Federated Hermes.
“After lagging the US and UK, the fiscal box is now opening, he said. The planned spending works out at about €100bn a month, higher than the €80bn spent in the wake of the European sovereign debt crisis, he points out.
Impact of new social unrest on the US economy in two charts – Yahoo Canada Finance
In the charts — which you could see below — it’s clear that social unrest as measured by real-time user comments about the economy on Twitter is beginning to weigh on consumer confidence.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Consumer sentiment (left chart) had begun to stabilize in early to mid-May with states reopening and people returning to work after months of COVID-19 lockdowns. But then came the senseless killing of George Floyd by Minnesota police in late May and rampant protests and looting, and a plunge in consumer sentiment per Twitter data analyzed by Goldman.” data-reactid=”20″>Consumer sentiment (left chart) had begun to stabilize in early to mid-May with states reopening and people returning to work after months of COVID-19 lockdowns. But then came the senseless killing of George Floyd by Minnesota police in late May and rampant protests and looting, and a plunge in consumer sentiment per Twitter data analyzed by Goldman.
Meanwhile, negative sentiment on the economy (right chart) as measured by tweets not mentioning coronavirus has spiked over the past week. Some strategists have pushed back on a chart like this one, noting it’s part of a larger issue holding the economy back.
Great charts, although I would challenge the causation.
Social unrest reflects hopelessness – it is a consequence of extremely low confidence – the same low confidence that is likely to impact the economy, too. https://t.co/h5mjPWvn8X
— Peter Atwater (@Peter_Atwater) June 4, 2020
Ultimately it’s hard to determine if weakening consumer confidence over the past two weeks has seriously derailed a U.S. economy already in a sharp recession due to COVID-19. But for those on the Street betting for a V-shaped economic recovery later this year (stat: the S&P 500 is only 7.8% below its February record highs), the data presented by Goldman hints that is far from a sure bet as social unrest is sustained, weighs on consumer psyche and spending decisions.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.” data-reactid=”25″>Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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