They decide which stores will have to shut down, who can stay open and under what conditions, who gets wage support, who gets loans, who gets bailed out, who is left to survive on their own.
The hands of governments are everywhere in the economy during the pandemic. And it’s becoming obvious that they’re not going away — even when we start to recover.
With vaccines slowly being distributed across the country and the prospects of freedom inching closer, federal planning for the recovery has started in earnest, with an important budget on the horizon and widespread consultations in the works.
While federal involvement in the economy will look a lot different in the recovery stage than it does in the midst of the brutal second wave, it will be omnipresent all the same.
And for the most part, that seems to be just fine with many business leaders. In fact, they’re inviting it.
“It is time for government, with an industrial policy, to support the overall direction” of the Canadian private sector, says Monique Leroux, the former CEO of Desjardins Group and now chair of the Industry Strategy Council, a group of top business leaders asked by the federal government to advise it on how to handle the economic side of the pandemic.
The council has been talking throughout the pandemic to businesses large and small in all corners of the country, advising senior government officials and cabinet ministers in real time how to tweak business supports, how to help labour, and how to safely restart the economy even as the coronavirus rages.
Now, it has set out a longer-term strategy to pull Canada out of its funk and make sure the path to recovery shakes us out of the complacency of the past.
But unlike the inclination from the private sector of previous eras to shove government out of the way and let unfettered capitalism thrive, they want to see government as a full-fledged partner, putting money, policy and research into propelling key sectors in the hopes that we can take on the rest of the world.
“The concept is to bring a strong portfolio of public investments and private investment in a kind of renewed partnership between government, Canadian companies and pension funds and financial institutions in Canada to fully position our leadership in the world, (in areas) where we think Canada as a middle-sized country could make a difference,” Leroux said in an interview. “That’s the rationale.”
This doesn’t come out of the blue.
The United States and the United Kingdom are doing it, Germany and Israel are doing it, China and South Korea too. The protectionist tendencies of U.S. President Donald Trump prompted a doubling down on government involvement in economic direction in countries around the world. And then came the pandemic, showing countries in no uncertain terms that governments needed to be activist and even aggressive to ensure they have adequate medical supplies and vaccines.
But Leroux’s network told her that Ottawa’s involvement can’t just end with vaccines. Instead, it needs to become more strategic — and government insiders across the board have heard the appeal.
At first, the government’s involvement will come in the form of stimulus — up to $100 billion that Finance Minister Chrystia Freeland has already set aside to repair the damage caused by the pandemic and get people back to work. Training, infrastructure and other time-limited spending will form the bulk of the stimulus package — standard fare in the wake of recessions.
But the government has signalled on many fronts that it won’t stop there.
Freeland has indicated she will actively push Canada’s digital prowess. And the government’s new climate strategy, to cut emissions significantly by 2030, is as much an industrial strategy as it is an environmental policy, with its many incentives to push the country’s energy use away from fossil fuels and into clean technology and renewables.
Leroux’s council also wants to see federal support for leveraging data and intellectual property, ramping up the agri-food sector and promoting advanced manufacturing. We’ve heard similar recommendations from the likes of the Business Council of Canada and the economic advisory council to former finance minister Bill Morneau, led by Dominic Barton, now-ambassador to China.
There’s every indication that the government is all ears.
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But what if the government chooses wrong? Fans of a modern industrial strategy say they’re not advocating for government to pick winners. Rather, they say Ottawa spends billions every year on all sorts of incentives and subsidies for businesses. Instead of spending willy-nilly, they should have a strategy that pushes companies to be more competitive in the areas we are already good at.
It’s high risk. If governments, the financial sector and companies alike make the wrong bet, we will have wasted many billions of public and private money on mediocrity rather than excellence. But if they bet right, we’ll have jobs and profits for the next generation.
It looks like it’s a bet they’re all increasingly willing to take.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
