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WestJet’s retreat from Atlantic Canada pushes the federal government into a corner

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Two hours after WestJet announced on Wednesday that it was curtailing its flights to and from Atlantic Canada, an email went out to all MPs and senators from Liberal MP Chris Bittle, parliamentary secretary to Transport Minister Marc Garneau.

“The COVID-19 pandemic has had a tremendous impact on all aspects of the Canadian economy, but few industries have been more negatively impacted than the air sector,” Bittle wrote in a letter first obtained by Radio-Canada.

“Many of you have reached out to us to share your thoughts about the current impact of COVID-19 on the air sector. At this stage, we would like to hear from all parliamentarians [on] what is required to support a robust air sector in Canada.”

Last month’s throne speech promised “further support for industries that have been the hardest hit, including travel,” and the government’s consultations on support for the air sector apparently were due to start this week.

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While demands for government aid to the air travel sector have been building for months, WestJet’s regional retreat will drive those demands to a new level.

For the federal government, the case for doing something to prop up airlines and airports might be stronger than the case for doing nothing. But even if the government wants — or needs — to intervene, it still has to work out a way to do so that it can defend politically.

Bubble trouble

P.E.I. Premier Dennis King was among those calling on the federal government to take action on Wednesday. But it’s the region’s own “Atlantic bubble” pandemic policy — which imposes registration requirements on travellers from outside of Atlantic Canada and compels them to self-isolate for 14 days upon arrival in the region — that has caused the demand for flights in and out of the region to crater.

The Liberals probably don’t want to be blamed if reductions in air service across the country become permanent. And sure enough, New Brunswick Premier Blaine Higgs told CBC’s Power & Politics that he came away from a conversation with Intergovernmental Affairs Minister Dominic LeBlanc on Wednesday with the impression that “something’s going to happen” for the ailing industry.

 

 

Premiers are expressing concern after WestJet announced it would shut down most of its operations in Atlantic Canada. 9:52

The federal response to the pandemic has not ignored the country’s largest companies. All businesses have been able to access the federal wage subsidy. In May, the Liberals rolled out a targeted loan program known as the Large Employer Emergency Financing Facility (LEEFF).

WestJet has made use of the wage subsidy; Richard Bartrem, VP of marketing communications at WestJet, called it “terrifically helpful.” WestJet has not sought assistance through the LEEFF program.

“The conditions that were placed [on] it just made it unwieldy in terms of our ability to recover from the pandemic,” Bartrem said.

Critics have claimed LEEFF was rolled out too late and offers loans at terms less generous than what is available in the private sector. (When it was introduced, then-finance minister Bill Morneau called the program an option of “last resort” — so it might have been designed to not be popular.)

Only one company has been approved for a LEEFF loan to date, according to the federal government. Not long after the federal government announced that loan to Gateway Casinos (which operates 26 facilities across Canada), Conservative finance critic Pierre Poilievre was on his feet in the House of Commons ripping into the decision as an irresponsible use of public funds.

That’s the risk a government takes whenever it offers help to specific firms or industries — even in the midst of a global economic crisis.

The nationalization route

Transport Minister Marc Garneau has had to fend off questions already about compelling airlines to refund customers for flights that were cancelled by the pandemic.

At the time, Garneau’s stated reason for not forcing airlines to offer refunds seemed practical. Some struggling airlines might have collapsed completely if they were forced to pay back that money, he said. But if (or when) the federal government offers airlines support, the political conflict over refunds will come roaring back.

When Chrystia Freeland became finance minister in August, the National Airlines Council of Canada, which represents major carriers, wrote to her to outline a request for financial support in the form of “loans, loan guarantees or direct assistance.” Airline unions have asked for $7 billion in federal loans.

The airlines also want “a national framework to ease interprovincial travel restrictions … reciprocal border agreements with targeted safe countries” and the deployment of rapid COVID-19 testing.

Other countries have moved already to rescue their national carriers — in some cases through outright nationalization. The German government, for instance, now owns 20 per cent of Lufthansa. In Canada, any nationalization presumably would have to involve both Air Canada and WestJet.

LEEFF’s limitations notwithstanding, the program’s design suggests the government knew that it would have to justify and defend any effort to bail out a major corporate entity. LEEFF loan recipients have to abide by conditions that include restrictions on executive compensation and a requirement for climate-risk disclosure. Perhaps new conditions would help make loans for airlines more politically acceptable.

The political downside to bailouts

But even if the Trudeau government changed the terms of LEEFF to make it more industry-friendly, it still could be left to explain why the airline industry — or any other group of wounded firms — deserves special attention right now.

The Liberals have avoided taking a sector-specific approach to pandemic relief to date. If they start providing sector-specific assistance now, the floodgates will open — other sectors will demand the same assistance, or at least call on the Liberals to explain where they’re drawing the line and why.

The government’s throne speech specifically mentioned one avenue for assistance: supporting regional routes for airlines. “It is essential that Canadians have access to reliable and affordable regional air services,” the speech said. “This is an issue of equity, of jobs, and of economic development.”

That’s a justification for targeted support. Would that be enough?

There’s also the question of timing. As Premier Higgs acknowledged in his interview with Power & Politics, financial support will be of limited use as long as large numbers of people are uncomfortable with the idea of flying — and have nowhere to go.

Free-market disciples might turn their noses up at all of this, but the Trudeau government probably doesn’t see this as the right moment to insist on laissez-faire economics. And perhaps the other federal parties will be reluctant to make the case for doing nothing as well.

For Trudeau, the challenge is to come up with an approach that makes things better — without making his government’s political burden significantly heavier.

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Northwest Territories releases fiscal year 2023-2024 budget

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Northwest Territories releases fiscal year 2023-2024 budget

The Northwest Territories government released its new budget Wednesday, the last before the territorial election set for the fall.

Finance Minister Caroline Wawzonek said the plan aims to maintain the stability of the territory’s economy during times of “volatility and uncertainty” without reducing services and programs.

“I am confident that we are leaving the next assembly with a fiscally sustainable foundation on which to build,” she said.

The proposed $2.2-billion budget forecasts the territory will have an operating surplus of nearly $178 million. It projects revenue to increase by 2.9 per cent, largely due to an increase in federal transfers, while spending will increase by $187 million or 7.3 per cent compared to the previous budget.

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Wawzonek said initiatives to address the rising cost of living in the North include increasing student financial assistance, improved income assistance for seniors and people with disabilities, and support for non-government organizations.

“Students, seniors, the non-profit sector, these are areas where we can have a real impact and hopefully help mitigate the impacts of inflation,” she said.

Increased spending in the budget is to include $82 million for mandate priorities and enhancements to existing programs, as well as $62 million to cover the costs of flooding in 2022. Thousands of residents in Hay River and the nearby K’atl’odeeche First Nation reserve were ordered to evacuate their homes due to the worst flooding on record in May.

Other budget highlights include $10.9 million for the transition from the pandemic to endemic stage of COVID-19, $10.1 million to help recruit and retain front-line health-care workers, $10.3 million for the territory’s $10-a-day child-care agreement with the federal government, $8.3 million to help offset the effects of the increased carbon tax, and $4 million for core Northwest Territories Housing Corporation programs.

The budget also proposes $833,000 for community governments and $89,000 for the Deline Goti’ne Government to reach the territory’s goal of reducing its municipal funding gap by $5 million between 2019 and 2023.

The N.W.T. government is not proposing any new taxes, but property taxes are expected to increase due to inflation. The territory also plans to change its carbon tax system to align with new federal requirements.

The federal government announced in August 2021 it would increase the carbon price by $15 per tonne of carbon dioxide equivalent emissions annually, starting at $65 a tonne beginning in April and rising to $170 a tonne by 2030. It is also prohibiting rebates that directly offset the carbon tax. In response, the N.W.T. plans to adjust its carbon tax rates, replace its heating fuel rebate by increasing its cost of living offset, and replace a carbon tax rebate for large emitters with a rebate tied to a facility-specific baseline.

Some legislature members have expressed concern with the plan as heating costs are high in the North, especially in the Arctic, and many communities are reliant on diesel.

Wawzonek said if the proposed changes aren’t passed by the legislature, the federal government will determine how to return revenue to the N.W.T.

The territory projects borrowing will increase by 4.5 per cent, bringing its total debt to about $1.5 billion, which it said is well below the federally imposed limit of $1.8 billion.

When the previous budget was tabled a year ago, the territory expected its total debt to increase to more than $1.6 billion by the end of the fiscal year. In October, however, the territory revised its capital estimates or the amount of money it expected to spend on infrastructure, to better reflect the territory’s capacity to complete projects, reducing spending from more than $500 million to a cap of $260 million.

The territory’s 2022-2023 $2.1-billion budget saw a 2.3 per cent increase in spending compared to 2021-2022.

Wawzonek touted that budget as a sustainable plan, promising to not cut programming or add new taxes while limiting new spending.

While the budget was passed in April 2022, several legislature members opposed the plan, criticizing limited spending on communities outside of Yellowknife.

Wawzonek said at a news conference Wednesday that she suspects there may be similar criticisms of the new budget.

She said, however, that she believes the budget can respond to those concerns, adding she has had discussions with legislature members about what they wanted to see in it.

“I think we as a collective 19 are getting a little better at doing that,” she said.

“I actually think this is maybe going to be the best year for the consensus-style approach to passing a budget.”

This report by The Canadian Press was first published Feb. 8, 2023.

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This story was produced with the financial assistance of the Meta and Canadian Press News Fellowship.

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Driver charged with first-degree murder in Quebec daycare bus attack that killed two

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Quebec daycare bus attack

The driver of a bus that crashed into a suburban Montreal daycare this morning, killing two children, has been charged with two counts of first-degree murder.

Pierre Ny St-Amand, 51, appeared by video late this afternoon from a hospital room and will remain detained

Court documents show he faces a total of nine charges, including attempted murder, aggravated assault and assault causing bodily harm.

Six other children were injured and transported to hospitals in Laval and Montreal, but doctors said their lives were not in danger.

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At around 8:30 a.m., a Société de transport de Laval bus crashed into the daycare building, which sits at the end of a driveway a significant distance from the nearest bus route.

Witnesses who rushed to the scene said they had to subdue the driver, who seemed to be delirious and removed his clothing after getting off the bus.

This report by The Canadian Press was first published Feb. 8, 2023.

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Canadian assessment team deployed to Turkey after earthquake

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Canadian assessment team deployed to Turkey

A senior government official says a Canadian assessment team is on its way to Turkey to determine how Canada can contribute to earthquake relief efforts.

International Development Minister Harjit Sajjan was expected to formally announce the deployment of the Canadian Disaster Assessment Team this evening.

The senior official, who spoke on background pending Sajjan’s official confirmation, said the team consists of a handful of military and Global Affairs officials.

The official underscored that the deployment of the team does not automatically guarantee a further deployment of Canadian resources to the country.

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The earthquake, which razed thousands of buildings in Turkey and Syria on Monday, is one of the deadliest quakes worldwide in more than a decade and the federal government is facing criticism that the window to help with rescue efforts is closing.

Search teams from more than two dozen countries have joined tens of thousands of local emergency personnel and Canadian humanitarian aid workers with charitable organizations were arriving Wednesday

Defence Minister Anita Anand said late Tuesday that the federal government had not ruled out sending a Disaster Assistance Response Team, to help with the recovery effort, but that it was working to figure out what would be most useful.

The assessment team would recommend whether to send additional support, such as a DART.

Earlier Wednesday, Prime Minister Justin Trudeau announced the federal government would match funds donated to Canadian Red Cross relief efforts up to $10 million on top of an initial aid package of $10 million.

This report by The Canadian Press was first published Feb. 8, 2023.

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