As the COVID-19 caseload shows every sign of surging in Canada, the delivery of promised financial relief for people who’ve lost their jobs or closed their businesses remains maddeningly slow.
The federal government’s emergency wage subsidy is at least three weeks away from being available. It could take even longer. The emergency response benefit for those who already have lost their jobs begins phased-in registration for the program on Monday.
Small businesses, which still have to pay rent and other bills, continue to wait for promised $40,000 interest-free loans as the Department of Finance continues to negotiate its delivery with the country’s banks.
Waiting for the banks to step up
Finance Minister Bill Morneau said this week that his department has been working every day with the banks. He told members of the Commons finance committee that the “intense negotiations” are going well and that banks are “close to offering” the interest-free loans, perhaps as early as next week.
“We are going as fast as humanly possible,” he told opposition MPs on the committee.
Watch: Finance Minister Bill Morneau on rapid development of economic program:
Finance Minister Bill Morneau says government programs that would normally take about 2 years to develop are being built in short order due to the COVID-19 crisis. 1:29
But the pace remains too slow for many, even as political leaders grapple with a bewildering array of new challenges on a daily basis.
Today alone, the prime minister was forced to respond to U.S. President Donald Trump’s directive to Minnesota-based 3M to stop shipping N95 masks to Canada. Ontario released projections saying there could be 80,000 cases of COVID-19 in the province by the end of the month, and that the pandemic’s effects could last as long as two years.
‘Extreme sacrifices’
“These numbers are stark and they are sobering,” said Premier Doug Ford as he announced more mandatory closures of workplaces, including construction projects.
“We have to make difficult choices and extreme sacrifices.”
The sheer scale of the pandemic — the possibility that tens of thousands of Canadians could die, the prospect of self-isolation and business closures lasting for many months — simply adds to the stress felt by Canadians worried about their immediate future.
Pedestrians walk past a closed store on Ste. Catherine St., Monday, March 30, 2020 in Montreal. For a lot of Canadian businesses, temporary closures could become permanent. (Ryan Remiorz/The Canadian Press)
The Canadian Federation of Independent Business released a survey this week suggesting that up to a third of small businesses that have closed because of COVID-19 will never re-open. Another 23 per cent of the 9,000 members who responded to the CFIB survey indicated they would not make their April rent payments.
It’s led many to question why Canadian banks aren’t doing more to help.
‘Business as usual’
Former Conservative leadership candidate Rick Peterson wrote an op-ed piece this week criticizing the banks for failing to be proactive and for continuing to charge high fees and credit card interest rates.
“It’s basically business as usual,” he wrote in The Edmonton Journal. “Sure, the banks have deferred payments for up to six months on mortgages and some loans — but the interest charges continue to accrue. Credit card payments have been deferred as well, but interest charges and transaction fees stay the same.”
New Democrat MP Peter Julian issued his own public appeal to the banks earlier this week.
“All Canadians are making sacrifices to get our country through this crisis,” he wrote in an open letter. “Financial institutions, particularly Canada’s six big banks, can play their part by waiving interest fees and charges on bank loans, line of credits and mortgages for the next two payment cycles.”
Government balks at using the Bank Act
New Democrats urged the Trudeau government to use its authority under the Bank Act to reduce interest rates, and to work with the provinces to freeze any rent increases and utility payments.
Government officials, who spoke on background, said banks are cooperating and using the hammer of the Bank Act would be counterproductive.
“We get that people want relief,” said one official. “To be fair here, the banks are very aware that they are a critical piece of keeping the economy healthy.”
The Canadian Bankers Association says it is working with both governments and customers to help them weather the pandemic.
Spokesman Mathieu Labrèche replied to written questions from CBC News on Friday to say nearly a half a million requests for mortgage deferrals were either completed or were in the process of being completed over the past two weeks — about 10 per cent off the mortgages held by the country’s six largest banks.
Watch: Trudeau asked about Canada’s talks with OPEC on reducing oil production:
Prime Minister Justin Trudeau spoke to reporters on Friday 2:43
Over that same period, the banks have dealt with about 100,000 credit card deferral requests.
“Canada’s banks assembled quickly and made a commitment to work with their customers to provide flexible solutions to help them manage through financial hardship,” Labrèche wrote. “Many banks have programs in place to help … make debt more manageable and structure the right solution, for example rolling in credit card debt into term products with lower interest rates.”
Short-term relief, long-term burdens
But that relief is temporary. And for many people, the cost of servicing those debts will actually increase in the long run.
CIBC announced Friday that any clients with personal credit cards who want to skip a payment will receive a temporary lower rate of 10.99 per cent retroactive to March 15. But the accrued interest over the deferral period is going to be added to the cardholder’s outstanding balance. “Once your payments resume,” the bank acknowledges, “your minimum payment may be higher as a result of a higher outstanding balance.”
A letter from TD Bank to one of its mortgage customers outlines the consequences of deferrals:
“It’s important that by deferring mortgage payments you’re not paying the mortgage principal, and interest will be capitalized, (that is, it will be added to the outstanding mortgage balance so your balance will increase),” the letter said. “We want to ensure you understand the impact.”
It’s a fair bet that Canadians do understand the impact. They also understand why it’s up to the government to ensure the banks’ interests don’t run counter to those of their customers — the ones obeying the government directives to stay at home at great personal cost.
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.
