BLOOMBERG, SEPTEMBER 23, 2020
In the short term, Canada will “do whatever it takes, using whatever fiscal fire-power is needed to support people and businesses during the pandemic,”
By Kait Bolongaro for Bloomberg – Prime Minister Justin Trudeau says his government will launch a campaign to create 1 million jobs in Canada, returning employment to pre-pandemic levels.
In a speech Wednesday delivered by Governor General Julie Payette, Trudeau outlined plans to support workers and businesses, saying his government will do whatever is necessary to bring the country through the coronavirus crisis. Immediate steps include extending the emergency wage subsidy program until next summer and expanding credit facilities for companies, as well as more targeted support for the hardest hit industries.
“The first foundation of this plan is to fight the pandemic and save lives,” the government said. “Effectively dealing with the health crisis is the best thing we can do for the economy.”
It’s one of the most anticipated speeches in Trudeau’s five years in power, with questions mounting over how his Liberals plan to navigate their next policy steps amid surging Covid-19 case numbers. The government already projects a budget deficit equal to 16% of gross domestic product this year, the widest since World War II. Credit rating agencies and investors including BlackRock Inc. want hard details on how he plans to pull Canada back from a record borrowing binge.
Those details were absent from the address, which opens a new parliamentary session. Trudeau included a section in the speech on “fiscal sustainability,” pledging to preserve Canada’s advantage and be guided by “values of sustainability and prudence.”
But Trudeau also pledged to use “whatever fiscal firepower” is needed to surmount short-term challenges.
“This is not the time for austerity,” the government said, adding the economic impact of coronavirus on Canadians has already been worse than the 2008 financial crisis. “Canada entered this crisis in the best fiscal position of its peers.”
The prime minister indicated he will apply more fiscal prudence to a longer-term list of objectives including a national daycare system, pharmacare and more spending on housing. That spending will be carried out “responsibly” in a “sustainable approach for future generations.”
The government’s will outline its economic and fiscal position in a fall budget update.
Canada’s currency extended declines after the speech began, down 0.6% to C$1.3381 against its U.S. counterpart at 4:04 p.m. Toronto time.
Since he lacks a majority in the legislature, Trudeau is only a parliamentary vote away from facing the electorate and Canadians may have little stomach for anything but a focus on jobs and staying healthy.
The prime minister needs to balance the need for more health-care spending with promises to engineer an ambitious and green post-pandemic agenda. And he needs to do it without further eroding the nation’s financial credibility after one major credit-rating agency downgraded Canada’s debt.
In the short term, Canada will “do whatever it takes, using whatever fiscal fire-power is needed to support people and businesses during the pandemic,” he said.
Trudeau outlined four pillars to his government’s agenda. Top priorities remain health care and the immediate fight against the pandemic, followed by maintaining Covid-19 financial support for businesses and Canadians. The government still plans “to build back better to create a stronger, more resilient Canada,” while a fourth pillar is to fight social inequalities and reconciliation with indigenous peoples.
One of the cornerstones of Trudeau’s agenda is a campaign to create 1 million jobs. The Canada Emergency Wage Subsidy will be extended until summer 2021. The flagship Covid-19 business support plan provides up to 75% of an employee’s wages to companies experiencing revenue drops due to the pandemic.
Trudeau laid out plans to crack down on digital giants, including measures to ensure they share revenues from media, music, art and film. “Web giants are taking Canadians’ money while imposing their own priorities. Things must change, and will change,” the government said.
It is also looking at addressing corporate tax avoidance by digital giants as well as additional ways to tax the most wealthy.
In terms of his climate goal of cutting emissions by 30% by 2030, Trudeau said he plans to fast-track those targets and will legislate reaching net-zero emissions by 2050, partly through the Clean Power Fund and supporting investments in renewable energy.
A national childcare program would help women and one parent families return to the workforce, the government said, adding it remains committed to universal pharmacare and setting national standards on long-term care homes.
© 2020 Bloomberg L.P
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