A $230-million stimulus program expected to employ 2,000 Nova Scotians and rebuild important infrastructure assets is a needed emergency measure to rebuild an economy devastated by the COVID-19 crisis, but there’s plenty of pain still to come, warns a Halifax economist.
“For a province like Nova Scotia, $230 million of debt is significant but on the other hand we’re still focused on containing the economic pain that’s been caused by COVID-19 and I think that’s the first matter of focus,” said Melvin Cross, a Dalhousie University economics professor. “If you have 2,000 people otherwise unemployed and have them doing something that will add to the assets of the province then such a program is worth considering.”
Premier Stephen Mcneil unveiled the provincially funded plan on Wednesday when he announced the province’s economy would completely reopen on June 5. The provincial monies will pay for projects across the province, such as roads, bridges, school repairs and museum, courthouse, and hospital renovations. Statistics Canada reported earlier this month that 50,000 jobs were lost in Nova Scotia in April.
The professor said the program is a reasonable first response in addressing “the economic pain we see people experiencing.”
“Will we have more discussions about the details of this program and have some dissatisfaction with it, probably. That doesn’t mean the concept is unsound.”
Cross said there’s a possibility that the Bank of Canada would pony up cash to pay a portion of the stimulus program, much better than the alternative, he added.
“It would be unwise to increase tax rates in the economy that’s already lumbered with unemployment and businesses struggling to deal with the consequences of COVID19.”
Scotiabank released a report earlier this month predicting Nova Scotia could feel less economic pain caused by COVID-19 compared to other provinces.
The report said besides Saskatchewan, Nova Scotia is the only province likely to avoid record deficits in the 2021 fiscal year. Yet it predicts Nova Scotia will have a roughly $970-million deficit.
While the government has a key role to play in assisting businesses and rebuilding the economy there’s a limited pot of money available, said the professor. He likened the province’s predicament to fighting a raging fire with only a limited water source available.
“If we drained too much water out of the lake and you have to stop, well do you have the fire controlled yet?” said Cross. “Well, you say at what point do you decide it’s not appropriate to use water to put out the fire?”
The Chronicle Herald inquired with the province about the economic consequences of the stimulus plan, including whether it’s now in a deficit and if money has to be drawn from other government departments to pay for the program, but did not get answers to those questions.
Cross said as long as there’s no effective treatment for COVID-19, the province and country can expect to feel significant economic pain.
“We might get a bit of relief this summer If COVID-19 acts the way better understood flu viruses act but the epidemiologists tell us that we must be prepared to manage a second wave of COVID.”
Patrick Sullivan, CEO of the Halifax Chamber of Commerce, said he was pleased with the province’s decision to reopen those businesses closed during the lockdown, including restaurants, hairdressers and gyms. A $25-million Small Business Reopening and Support Grant was also announced on Wednesday for eligible businesses, nonprofits, charities and social enterprises to open safely. That amounts to $5,000 grants to businesses to purchase public health equipment necessary to reopen their business; money that’s badly needed and appreciated, said Sullivan.
“But there’s still concern restaurants will only be reopening at 50 per cent capacity and there will likely be reduced tourism this summer. We appreciate the need to operate safely because we don’t want this to happen again. “
Because of restrictions on international travel, tourism operators in the province face a daunting summer season. He’s encouraging Nova Scotians to choose a staycation to support the sector and advocating for the government to introduce a $2,000 accommodations tax credit to incentivize people to stay home.
He said businesses are in need of plenty more support but said there are still assistance programs available to small businesses through ACOA and Community Business Development Corporation. Sullivan said the federal Canada Emergency Commercial Rent Assistance Program, offering to cover 75 per cent of rent for small businesses, is flawed and has limited uptake largely because it’s optional for landlords. He said financial assistance should be made available to the tenant, not the landlord.
In the end, he couldn’t predict how many businesses in Halifax might be forced to close.
“I don’t know and don’t think anyone does right now I think the majority of businesses have tried to get their way through this to get a reopening day.”
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.
