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COVID-19: Federal deficit projected to reach $184B as economic response rolled out – National Post

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OTTAWA — The 2021 federal deficit is now expected to reach $184 billion, or 8.5 per cent of GDP, as Ottawa unveils pricey new spending measures to combat the economic fallout from COVID-19.

The latest deficit projection, posted by the Parliamentary Budget Officer on Thursday, is more than triple the previous deficit record set by former prime minister Stephen Harper, who ran a $56-billion gap in 2009 to fend off economic recession.

The updated forecast comes after Ottawa unveiled plans for a $73-billion wage subsidy program for Canadian businesses, an initiative which continued to face criticism on Thursday for its delayed rollout.

The ballooning budget shortfall will nudge the federal debt-to-GDP ratio above 40 per cent, according to the PBO — the highest in 20 years. That figure remains below the record-high 66.6 per cent of 1996, which led to several years of fiscal austerity measures.

Before the pandemic spread, Canada’s net debt-to-GDP ratio was around 30 per cent, and the Liberals had repeatedly claimed they would continue to drive that figure down, as a way to prove their fiscal prudence. In his 2019 fiscal update, however, Finance Minister Bill Morneau posted a 2020 deficit that was $7 billion higher than expected, which in turn pushed the national debt ratio slightly higher.

Also on Thursday, business groups repeated criticism of Ottawa for delays in rolling out the wage subsidy program, one of two key spending measures announced by Morneau in an attempt to reduce the economic pain caused by COVID-19. Direct spending measures announced in recent weeks now total $107 billion.

Businesses have expressed confusion over whether they are eligible for the subsidy, because of a requirement that says they must prove they have lost a certain amount of revenue over the past year.

In addition, an online portal through which companies can apply is expected to take three to six weeks to complete, meaning thousands of companies will likely be forced to lay off personnel before the program is operational.

During testimony at the House of Commons Finance Committee on Thursday, Dan Kelly, head of the Canadian Federation of Independent Business (CFIB), said his organization used to get around 50 calls per day from businesses who need help navigating public policy; that number is now closer to 800, he said, as firms struggle to grasp the eligibility requirements.

“The complexity is really causing a lot of problems right now,” Kelly said.

According to a survey of its members, the CFIB found that 80 per cent of small businesses are now shuttered, as the Canadian economy remains in lockdown. The organization represents around 110,000 companies. Thirty per cent of respondents will be unable to pay their April bills, and 39 per cent are contemplating permanent closure, the survey found.

“Everyone was prepared for this to last for a couple of weeks, but those couple of weeks are now a couple of months,” Kelly said.

His criticisms were widely shared by other witnesses at the Finance Committee on Thursday, particularly over the length of time it is expected to take before applications will be accepted by government.

Everyone was prepared for this to last for a couple of weeks, but those couple of weeks are now a couple of months

“There are significant problems with these proposals,” said Kim Moody, director and CEO of Canadian Tax Advisory. “Three to six weeks is simply too long — way too long.”

Witnesses at the committee meeting also acknowledged that the $73-billion program would be inherently difficult to administer, as it needed to be crafted in as a little as a few days, while also sufficiently weeding out applicants seeking to game the system.

The wage subsidy was touted as a necessary measure by business groups and economists, who have argued that the Canadian economy is likely to see a hastier rebound if more Canadians remain employed, rather than being re-hired after social distancing controls are lifted.

The wage subsidy will cover up to 75 per cent of payroll for firms, but requires companies to pay the remaining 25 per cent. Morneau initially announced a 10 per cent subsidy, which lobby groups claimed was inconsequential.

The rising deficit figures come as Statistics Canada on Thursday posted an unemployment rate of 7.8 per cent in March, after 1.01 million people lost their jobs over the course of the month.

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A timeline of events in the bread price-fixing scandal

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Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 250 points, U.S. stock markets also higher

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TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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