Former finance minister Bill Morneau says Canada was poised to make an economic recovery when the second wave of the COVID-19 pandemic hit — and he’s now worried about a “rocky” road ahead for some sectors of the economy.
In a recent interview, Morneau told CBC’s Rosemary Barton that Canadians should be prepared for more “difficult periods” during the pandemic and warned the government’s finances will be under much more stress than anyone thought possible at the outset of 2020.
“We were on the road to recovery. This is a really difficult setback. I suppose we expected that we were going to have a second wave but this is more challenging, I think, than we expected,” he said.
“It means the road to recovery will be uneven, it will be rocky … It’s going to be long.”
Morneau said his successor at Finance, Chrystia Freeland, will soon have to decide how best to backstop industries that are particularly endangered by the virus, while also maintaining “healthy economic competition in the future.”
“There’s going to be specific sectors of the economy that are not going to recover as quickly and some that are going to have challenges recovering at all,” he said, citing the airline and tourism sectors, among others.
WestJet planes parked at the Calgary Airport in March, 2020. It’s impossible to predict the effects COVID-19 will have on the airline industry in the long term. (Jeff McIntosh/The Canadian Press)
While Ottawa has an economy-wide wage subsidy program to help businesses offset the cost of paying employees, the government has not produced any sector-specific support for the airline industry, which has been ravaged by travel restrictions and mandatory quarantines.
The full interview with Morneau will air on Barton’s new show, Rosemary Barton Live, which debuts today at 10 a.m. ET on CBC News Network and 11 a.m. ET (12 p.m. AT) on CBC TV.
Canada was able to reduce the COVID-19 case count over the summer months. Since September, with the return to school and work, the number of people contracting the virus has risen dramatically.
There are now many more cases being counted in some parts of the country than there were in the first wave this spring.
Manitoba reported a record 480 cases on Friday, with a five-day test positivity rate of 8.6 per cent — an eye-popping number that is well above those posted by some of the hardest-hit U.S. states.
In response, some provinces and territories have pushed closures on certain industries, like bars and restaurants and gyms, to help curb the spread.
But in most cases, the number of people in hospitals and intensive care units (ICUs) remains manageable, and Prime Minister Justin Trudeau has said he’s not yet prepared to plunge the country into another national lockdown.
Morneau resigned from his post as finance minister over the WE Charity scandal. He did so as some news outlets quoted unnamed government sources reporting friction between Morneau and Trudeau over how much Ottawa should spend to prop up a faltering economy.
WATCH | Bill Morneau on OECD bid, Canada’s COVID-19 rebound:
CBC Chief Political Correspondent Rosemary Barton sits down with former finance minister Bill Morneau to discuss the challenges of Canada’s COVID-19 economic recovery and why he’s running to be secretary general of the Organisation for Economic Co-operation and Development (OECD). 4:35
Morneau was accused of being too frugal in his fiscal approach, with some elements of the Liberal government pushing for much more government intervention.
Morneau told Barton that he had a solid partnership with the prime minister in the early days of the pandemic and both agreed to flow funds through the Canadian emergency relief benefit. He acknowledged, however, that there were strains on the relationship.
“I think we worked well together. There’s always going to be a lot of stress and strain … some days are tough,” he said.
“The pandemic — it was an intense and stressful time for everyone. And we worked hard and there was lots of pushing and pulling to get to the right answers.”
WATCH | ‘It’s always a little bit messy when you leave politics’:
Bill Morneau opens up to CBC Chief Political Correspondent Rosemary Barton about the WE controversy, as well as reports that he was at odds with the prime minister and why he resigned as finance minister. 9:26
Despite the reports of friction around the cabinet table, Trudeau has endorsed Morneau for the secretary general position with the Organisation for Economic Co-operation and Development (OECD), an intergovernmental agency that promotes democracy and the market economy.
Morneau said he is running for the job to help co-ordinate the global economic response to COVID-19, to bolster the group’s work on climate change issues and to draft policies on how best to tax and regulate digital web giants like Facebook and Google.
He said he will bring his managerial experience — he was an executive at human resources firm Morneau Shepell — and his political bona fides as a former finance minister to the position. Some observers have raised doubts about the prospects of his candidacy, given his involvement in the WE Charity affair.
The 37 OECD member countries — largely Western nations — will decide in private who takes the job. The appointment will be announced in March 2021.
Morneau said he’s met with OECD representatives of the member countries in Paris and had a “favourable reception” to his candidacy.
As for what should be done on the domestic front, Morneau said Ottawa must continue to spend freely to help Canadians and businesses weather a pandemic that has badly disrupted social and economic life in this country.
The government’s debt will balloon as a result of all this new spending — something Morneau said is inevitable, given the enormous task before policy-makers.
The federal government hasn’t tabled a budget in more than 18 months — a Canadian record — but Freeland is preparing an economic update of sorts to be tabled in the coming weeks.
In his last update, published in July, Morneau projected the deficit would hit $343 billion this year — a massive figure largely attributed to pandemic-related support programs that have pushed federal spending to a level not seen since the Second World War.
The federal debt will easily tick over the $1 trillion mark next year.
“We have to have an economy when we come out of it,” Morneau said. “But it means there’ll be more stress than we could have even imagined a few months ago.”
According to the latest jobs report data, published by Statistics Canada in September, the country’s unemployment rate is at nine per cent. There are 720,000 fewer people working now than there were in the pre-pandemic period in February.
Canada’s economic growth rate has seen a marginal improvement since the depths of the national lockdown in March and April, but it is still well below what it was before COVID-19 hit our shores.
Statistics Canada said in August that the country’s gross domestic product (GDP) contracted at an annualized rate of 38.7 per cent in the second quarter — the worst performance for the economy since comparable data first started being recorded in 1961.
“Canada has done well, comparatively … but there’s a lot of road ahead of us,” Morneau said.
Watch Rosemary Barton Live on CBC News Network Sunday at 10 a.m. ET and streamed live on CBC Gem. And you can also catch Rosemary Barton Live on CBC TV across the country at 11 a.m. (12 p.m. AT/12:30 NT).
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.
