The federal parties took the first full day of campaigning to lay planks in their plans to revive the country’s economy after months of pain from the COVID-19 pandemic, and options for covering the costs.
Unprecedented aid has flowed from federal coffers since the onset of the pandemic last year, which parliamentary budget officer Yves Giroux estimates will hit $352 billion in direct support by 2026 when all measures come to a close under existing plans.
Business groups said Monday their members were looking for a detailed road map for recovery, including targeted aid for businesses still smarting from public health restrictions through to next year and debt relief for small companies that piled on debt to survive the downturn.
The Liberals promised to extend a hiring credit first unveiled in their recent budget through to the end of March 2022. They also pledged to provide extra help to the hardest hit sectors like tourism and live theatre that are facing a steeper climb back to pre-pandemic levels.
“For hard-hit businesses who get the workers they need, to workers who get the jobs they need to support their families, this is a win-win,” Liberal Leader Justin Trudeau said in Longueuil, Que.
Trudeau said the final bill would be dictated by how quickly the economy recovers and aid would no longer be needed.
Conservative Leader Erin O’Toole took the first full day of campaigning to lay out his party’s full platform, which similarly aims to create jobs by spending in the immediately future, spur growth at levels above the budget officer’s outlook, and balance the budget by 2031.
“We’re making sure we put a recovery plan forward and that we’re never again unprepared for a crisis or running massive deficits in good times like Mr. Trudeau,” O’Toole said.
His plan also unwinds the Trudeau government’s child-care system and replace it with a tax credit that O’Toole said would help low-income families cover up to 75 per cent of daycare costs. The pledge brought a sharp retort from Trudeau, argued the Conservative plan would hurt women.
Meanwhile, NDP Leader Jagmeet Singh promised to pry money out of the pockets of CEOs who saw their compensation rise even as their companies received federal business aid, adding to other New Democrat promises to tax the ultrarich to pad government revenues coming out of the pandemic.
“There are lots of ways for us to make sure that burden doesn’t fall on you or your families, doesn’t fall on workers, doesn’t fall on small businesses,” Singh said in the downtown Toronto riding once held by former NDP leader Jack Layton.
“We can ask the wealthiest corporations, the super-rich to start contributing fairly to pay their fair share and we can invest that back into people.”
But the day was also taken over by other issues, including the government’s efforts to help Afghans who aided Canadian troops flee Afghanistan as the Taliban retook power, and mandatory vaccination rules for workers and travellers — signalling what may face the leaders between now and voting day on Sept. 20.
Bloc Québécois Leader Yves-Francois Blanchet spent the morning criticizing the inability of the Trudeau government to produce vaccines in Canada, saying that it was necessary for Quebec to have provincial production capacity rather than relying on foreign companies.
He also talked about the environment, telling reporters in English that it was necessary for Alberta to ween itself off of oil and gas with federal help.
“Solutions exist and we are willing to help and to accept the fact that more money would go there,” Blanchet said, “because we are all going to pay, the whole planet, if nothing is done.”
Similarly, Green Leader Annamie Paul called for an end to the construction of new pipelines, fracking, and oil and gas exploration so Canada could reduce greenhouse gas emissions and reshape the economy.
“We are going to be talking a lot about our green future and the climate in this election,” Paul said at an event in Toronto. “We are going to be talking concretely about how we get from here to there and how we can ensure a safe, sustainable future that ensures that Canada … becomes a competitive, green, global economy.”
VICTORIA — British Columbia’s economy will be a key focus for politicians as they return to the legislature for the spring sitting.
Premier David Eby says economists are predicating a “global slowdown and potentially recession” and his government is focused on keeping the economy strong by building trade relationships and supporting businesses.
The session starts with a speech from the throne today, which Eby says will outline the government’s key priorities of health care, housing, public safety and the economy.
However, Eby won’t be there for the start of the session.
He’ll be travelling to Ottawa where Prime Minister Justin Trudeau is hosting a first ministers’ meeting to try to work out an agreement with the provinces and territories for increased funding for health care.
B.C. house leader Ravi Kahlon says the government has plans to introduce more than two dozen pieces of legislation during the session, which is set to conclude in May.
The government will table its budget at the end of the month.
This report by The Canadian Press was first published Feb. 6, 2023.
During china’s lunar-new-year holiday, which ran from January 21st to 27th, tourists flocked to the sprawling Taihao mausoleum in Henan province. Many enjoyed slapping a statue of Qin Hui, a scheming official in the Song dynasty who is notorious for having framed a military hero. One visitor got carried away, striking the statue with the lid of an incense burner. Feelings are running high after Qin’s villainy featured in a new film, “Full River Red”, which topped the box-office charts during the holiday.
This enthusiastic movie-going, sightseeing and statue-slapping is evidence of a surprisingly speedy consumer revival in the world’s second-biggest economy. The mausoleum says it received 300,000 visitors in the festive period, the most in three years. Box-office revenues were not only better than last year, they were also higher than in the year before covid-19. China’s population, subject until recently to mass screening, is now massing at the screens.
The recovery is arriving earlier than expected because the virus spread faster. Since China hastily abandoned its zero-covid regime, infections appear to have passed remarkably quickly. State epidemiologists estimate that at least 80% of the population has already caught the disease. According to official figures, hospital inpatient numbers peaked on January 5th. A second wave of infections was expected after holiday travel spread the disease from cities to villages. But the virus beat the festive rush. The much-feared second wave appears to have merged with the first, notes Airfinity, a life-sciences data firm.
Although the death toll from all these infections is unknown, the economic aftermath is becoming clearer. As people have caught and recovered from the virus, China’s service economy is returning to life. An index of activity outside the manufacturing sector, based on monthly surveys of purchasing managers, jumped from 41.6 in December to 54.4 in January, the second-biggest leap on record. Xiaoqing Pi and Helen Qiao of Bank of America observe that activity in the service sectors “battered by the pandemic”, such as retail, accommodation and dining, has risen sharply.
On Meituan, an e-commerce platform, some restaurants have amassed waiting lists 1,000 tables long. People used to queueing for pcr tests now wait to pray at popular temples. In Hangzhou, the capital of Zhejiang province, people gathered outside the Linshun temple at 4am to light incense for the God of Wealth. Others who reached the top of the spectacular Tianmen mountain in Hunan province, famous for its vertiginous glass walkways, had to wait until 9pm to catch a cable car back down, according to the National Business Daily, a state newspaper.
Can this frenetic pace be sustained? Optimists point out that households are unusually liquid. Their bank deposits now exceed 120trn yuan ($18trn), over 100% of last year’s gdp, and 13trn yuan more than might have been expected given pre-pandemic trends, according to Citigroup, a bank. These deposits could provide ammunition for a bout of “revenge spending”.
Yet the ammunition may be set aside for other purposes. Much is composed of cash that nervous households kept in the bank rather than using to buy property or ploughing into a mutual fund. They are unlikely now to lavish it on goods and services. More likely, reckons Citigroup, is a bout of “revenge risk-taking”, as households gain confidence to buy bonds and shares that are less safe but potentially more rewarding than a bank deposit. This would lift asset prices and give a much-needed boost to the housing market.
Perhaps a more accurate way to assess the forthcoming spending boom is therefore to look at the gap between household income and consumer spending. In the three years before the pandemic, households saved 30% of their disposable income. During the pandemic they saved 33%. The cumulative result of this extra saving is about 4.9trn yuan. If consumers added that to their spending this year it would increase their consumption by 14% (before adjusting for inflation).
The exact size of the spree will ultimately depend on broader economic conditions. Property prices have fallen and the job market is weak, with youth unemployment still above 16%. But China’s labour market has bounced back quickly after previous covid setbacks, and jobless youngsters count for only about 1% of the urban labour force. With luck, a bit of extra spending will result in higher sales and stronger hiring, in turn motivating additional spending. All this means consumption could account for the lion’s share of China’s growth this year: almost 80%, according to Citigroup, if government spending is included. This would be the highest share for more than two decades.
China’s splurge will make a welcome contribution to global growth. According to the imf’s forecasts, released on January 30th, the country’s economy will grow by 5.2% this year, accounting for two-fifths of the expansion in the world economy. Together, America and the euro area will contribute less than a fifth.
A recent study by economists at America’s Federal Reserve makes a basic point with its title: “What Happens in China Does Not Stay in China”. Their estimates suggest a policy-induced expansion in China’s gdp of 1% adds about 0.25% to the rest of the world’s gdp after a year or two. The authors do not examine spillovers from China’s reopening. But their results give some indication of the possible consequences. If China’s reopening lifts the domestic growth rate from 3% to 5-6% this year, the spillover effects may be 0.5-0.75% of the rest of the world’s gdp, or about $400bn-600bn at an annualised rate.
An uptick in growth would not be an unalloyed good, however. Central banks still want to quash inflation. If higher Chinese demand adds to price pressures, policymakers may feel obliged to slow their economies by raising interest rates or delaying cuts. Lael Brainard, vice-chairwoman of the Fed, has noted that China’s exit from zero-covid has uncertain implications for global demand and inflation, especially in commodities. Christine Lagarde, head of the European Central Bank, has warned it will increase “inflationary pressure”, because China will consume more energy. According to Goldman Sachs, another bank, reopening could add $15-21 to a barrel of Brent crude oil, now trading at around $80.
After the Asian financial crisis in 1997, the Chinese economy helped to stabilise the region. After the global financial crisis a decade later, China’s growth helped to stabilise the world. This year it will once again make the single biggest contribution to global growth. But whereas in the past China’s contribution came from investment spending, now consumption will take the lead. Chinese consumers have traditionally punched below their weight. This year they will hit harder. ■