Finance Minister Chrystia Freeland received advice from all sides – the 145 recommendations of the House of Commons Finance Committee, the strong support Canada received this week from the International Monetary Fund (IMF) for its response to the COVID-19 pandemic, and the contribution it has made. obtained during its own pre-budget consultations.
But it all comes down to this: pay now … and pay later.
At least that is the sentiment expressed by three members of the House of Commons finance committee who participated in a roundtable broadcast on TBEN on Saturday. The House.
“I think we have no choice but to spend and basically target spending in areas that are definitely going to make a difference in terms of growing the economy,” said Wayne Easter, the Liberal MP who chairs the committee.
“I think it’s essential.”
NDP finance critic Peter Julian agrees Freeland must use this budget, the first in two years, to help Canadians shattered by the pandemic.
“Canadians are struggling to make ends meet. Small businesses are closing. Families are trying to find ways to put food on the table, to keep a roof over their heads,” Julian said. “And so the question is not whether to invest or not. The question is how to do that?”
A persistent pandemic means the future is uncertain
The “how” is the hard part.
Prime Minister Trudeau announced on Friday that the government is extending the number of weeks Canadians can claim benefits under a number of income support programs, including the Canada Recovery Benefit and the Canada Benefit disease recovery.
But the one thing Freeland doesn’t know – and can’t be said for sure as she works on the budget – is whether the pandemic will have run its course enough this spring to allow her to start investing to spur an economic recovery. .
Conservative finance critic Ed Fast says the spending priority must remain weathering the pandemic, launching vaccines and ensuring Canadians the financial support they need.
“And third, and this is really important, we have to understand what the future holds as Canada faces a huge financial challenge,” he said.
Fiscal anchoring is needed, says opposition
The past year has taken its toll on public finances. The forecast budget deficit is now close to $ 400 billion. And Freeland pledged in his fall economic update to spend up to $ 100 billion to spur an economic recovery.
Fast said there must be some kind of fiscal anchor to limit federal spending in this time of economic lockdown caused by COVID-19 outbreaks – whether it’s the size of the deficit or the country’s debt-to-GDP ratio. .
But the government argued that these are unprecedented times and normal benchmarks do not apply.
Asked this week in the Commons about the country’s high unemployment rate compared to the UK and US, Freeland was quick to note that the IMF had given Canada high marks for its response to the pandemic.
“The report shows that Canada’s strong and decisive actions have provided essential support to the economy and functioning financial markets and have helped protect people’s lives and livelihoods,” she said.
Another report released this week says Freeland needs to ensure that any new spending is limited, both in amount and in duration.
This report from CD Howe Institute The Fiscal and Fiscal Task Force said “any further debt-financed stimulus should be temporary, essential and focused” on improving productivity.
Avoid ongoing expenses
Conservative members of the finance committee released their own report on the pre-budget consultations. Fast said there was an executive order against the new permanent spending in Prime Minister Justin Trudeau’s January mandate letter to Freeland.
“Yet the first thing that has happened is the government announced a $ 3 billion per year transit program endlessly well into the future,” he said.
This permanent funding, announced last week, has been criticized by some political columnists even if it does not start until 2026.
Julian said investing in child care, affordable housing and the environment is essential not only to get people back to work, but also to ensure long-term economic viability.
“These are all things that also create jobs and help us get through the pandemic and rebuild afterwards,” he said. “And we can’t forget the elephant in the corner, which is climate change, which is already costing our economy $ 5 billion a year.”
These issues are also on the Liberal radar as the budget approaches.
“This will clearly be a focused budget, making investments to create the growth of the economy and support people, businesses and communities as we work our way through to the end of this pandemic,” Easter said. The House when asked if Freeland’s budget could also be designed for a spring election.
“We don’t need to go to an electoral roadmap. There aren’t supposed to be an election until 2023. So it will be targeted investments for the future, not for an election . “
Put this as another free tip for Freeland.