The Liberal government is ready to table a fall economic statement that attempts to balance the current needs of the COVID-19 response with plans for Canada’s post-pandemic economy and social-safety net.
On Monday, Finance Minister Chrystia Freeland will present her first fiscal and economic update since replacing Bill Morneau after the latter’s resignation in August.
The statement will provide detailed fiscal projections for the years ahead, something the Liberals haven’t done since the pandemic began in the spring.
The Liberals will also present new measures to fight COVID-19, and lay the groundwork for longer-term and higher-cost priorities, such as national affordable child care, pharmacare, and fighting climate change — measures that interest labour, but concern business groups.
“I expect the government to be clear … that they remain committed to the priorities identified in the throne speech, and ensure that those things are going to be delivered on,” Hassan Yussuff, president of the Canadian Labour Congress, told iPolitics.
The throne speech included a long list of promises to green the economy and strengthen the country’s social safety net — efforts Yussuff says are vital, if Canada is to emerge from the pandemic stronger than before.
The fiscal update coincides with a second wave of COVID cases, which have prompted new public-health restrictions that have shuttered businesses and rattled the confidence of consumers entering the holiday season.
Levels of consumer confidence for November are now at their lowest since May, according to the Conference Board of Canada’s index.
Perrin Beatty, president and CEO of the Canadian Chamber of Commerce, said COVID will still be around for the foreseeable future, so Canada must have a plan to manage, rather than merely react to, the pandemic.
“Unfortunately, up until now, the focus of governments has been: ‘Shut down and write a cheque,’ ” he told iPolitics.
Beatty said governments need to craft a more coherent strategy that better uses data and science to bring down infection rates, and allows Canadians to safely resume their lives soon as possible, while also ensuring resources get to the most vulnerable communities and economic sectors.
He said it’s wrong to think of a vaccine as a “silver bullet,” because it might not entirely eliminate the threat of COVID, and its distribution will take considerable time. The fiscal update should focus on current concerns, he said.
Speaking to reporters on Friday, Prime Minister Justin Trudeau said there are “very good chances” most Canadians will be vaccinated by September 2021.
He added that the fiscal update will include more support for Canadians during the pandemic, as well as plans to rebuild a “strong, resilient economy for everyone.”
Kevin Page said he expects the Liberals to punt some of their longer-term priorities to the next budget, while still presenting a comprehensive document.
“I think it will be more than a typical update; something probably looking like a mini-budget,” said Page, a former parliamentary budget officer and head of the University of Ottawa’s Institute of Fiscal Studies and Democracy.
The update should focus first on getting Canadians through the current crisis, said Elliot Hughes, a former policy adviser of Morneau’s.
“There’s going to be lots of time to sketch out those bigger things down the road,” he said. “What people want to know now is that the government’s got their backs.”
Hughes, now a senior advisor at Summa Strategies, cautioned that the government needs to keep its messaging “clean and straightforward,” but should be ready to answer questions about what to expect in the near future, as well in the recovery phase.
“It’s a tricky balance, but it’s one that you need to strike,” he said.
The statement will also update the deficit, which is expected to be Canada’s largest since the Second World War.It’s also expected to be without a fiscal anchor to manage debt levels, though Freeland has previously said there’s no “blank cheque” for spending.
A report released by RBC on Friday forecasts the annual deficit to approach $370 billion, higher than the $343 billion projected in July. The report says spending announcements will add at least $90 billion to the 2021-22 deficit, and extensions to the wage subsidy and recovery benefit could add even more.
Yussuff, who hopes the fall update will include money for infrastructure, child care and employment insurance, said now is not the time for fiscal restraint: Spending will both prevent an economic disaster and support women and people of colour, who’ve been disproportionately affected by the pandemic, he said.
“They’re going to need to be supported if we’re going to get to a full recovery.”
Beatty, who has supported Ottawa’s emergency spending thus far, said there should be a short-term child-care program to get mothers back into the workforce. But such spending must be targeted, and this is not the time for costly programs such as universal pharmacare, he said.
“Don’t get into programs that we can’t afford: permanent recurring programs that are simply going to build in a structural deficit.”
At what exact point Canada’s debt becomes a serious concern is being fiercely debated, Page said, but bond agencies might lower their credit ratings if Ottawa doesn’t re-introduce a fiscal anchor in the near future and the debt significantly increases.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
