Op-Eds
The spread of COVID-19 and public health measures to combat it have delivered an unprecedented shock to Canada’s economy. Businesses and not-for-profits are closing. Recent Employment Insurance (EI) claims suggest the unemployment rate is headed for double digits.
The economic distress is compounding the direct impact of the disease, and may ultimately overshadow it. Unemployment and financial distress hurt physical and mental health, and the implosion of the private-sector economy is propagating that damage. So just as Canadian policymakers must mitigate the health impacts, they must mitigate the economic impacts.
Governments elsewhere have stepped in to support jobs with direct wage subsidies. Canada’s federal government…
COVID-19 poses a threat to Canada’s economy that is unique in modern times. People are self-isolating, businesses and not-for-profits are cutting back or closing, and workers are losing their jobs. The consequences – including the health impact of unemployment, isolation and lost access to goods and services – could rival those of the coronavirus itself.
Governments have responded with measures that proved useful in the 2008-09 financial crisis. Lower interest rates, liquidity and credit-market supports will all help.
Also important are steps to ease the cash-flow crunch that threatens chain reactions of private-sector closings and layoffs. Federal, provincial and local governments are deferring remittance and filing…
The COVID-19 outbreak presents a unique threat to Canada’s economy. The last major crisis, in 2008-09, had the financial system at its core and responded well to injections of liquidity and support for credit markets. The coronavirus is not like that. It has stopped the economy cold. People are staying home. Many service industries have shut their doors. Output and employment are plummeting.
Canadian governments have responded. The Bank of Canada has slashed the overnight rate and is supporting credit markets. The federal government is supporting specific sectors through its various lending agencies. These are important measures and the experience of 2008-09 made them faster and more effective.
In 2008-09, however, people…
Actions and promises from policy makers last week gave Canadians badly needed signs that elected leaders and officials are working to limit the impact of COVID-19 on their health and their economy.
An emergency interest-rate cut from the Bank of Canada, and its new facility to support short-term credit, will help. Relaxed capital standards to facilitate bank lending from the Superintendent of Financial Institutions are also welcome. The federal government has announced some targeted spending, and plans to make credit available through Crown lenders. Finance Minister Bill Morneau has promised more fiscal measures shortly.
Helpful though these moves and announcements are, the economic repercussions from COVID-19 threaten to…
Alberta’s government will table its 2020-21 budget on Feb. 27. Its previous budget in October mapped out the government’s fiscal path to return to budget balance by 2022-23, including annual spending targets by program area. The government’s freeze on topline program spending translates into real per capita reductions in spending, particularly in health and education.
These targets are necessary to bring Alberta’s program spending in-line with nationwide benchmarks and to return Alberta to a sustainable fiscal path. However, while the government laid out its long-term plan in October, this budget must clearly specify measures for restructuring spending.
The challenge will be to implement spending reductions in the face of…
