Spending too little worse than spending too much, Freeland says in fall update
OTTAWA—Finance Minister Chrystia Freeland’s first fall mini-budget finds new funds for families and businesses and scratches a longtime provincial itch over transfer payments as she tries to find a delicate balance between pandemic anxiety and political prudence.
Freeland defended the federal government’s record deficit of more than $381 billion as affordable — given low interest rates — and necessary and accused the former Conservative government of withdrawing stimulus too quickly after the last recession 12 years ago.
“As we have learned from previous recessions, the risk of providing too little support now outweighs that of providing too much,” Freeland said.
“We will not repeat the mistakes of the years following the Great Recession of 2008.”
However Freeland responded to calls for some sense of when the federal largesse will end only by promising what she calls “fiscal guardrails” based on employment numbers, to guide when post-pandemic federal stimulus will start to be phased out.
“These data-driven triggers will tell us when the job of building back from the COVID-19 recession is accomplished, and we can bring one-off stimulus spending to an end,” Freeland said.
But as far as opposition parties are concerned, Freeland’s plan is a pie-in-the-sky effort that does not answer the main concern Canadians have about ending the pandemic: when and how they will be getting a COVID-19 vaccine.
“Canadians want their lives back,” said Conservative Leader Erin O’Toole.
Prime Minister Justin Trudeau said almost a week ago that while Canada has contracts for more than $1 billion in vaccines for COVID-19, because we aren’t producing any of the front runners here, we won’t be first in line to get them.
Opposition parties have pounced on the revelation. The Conservatives have gone as far as to suggest Canadians could be waiting until 2023, though the first vaccines are expected to arrive in Canada in January.
The government has been trying hard to repair the damage from Trudeau’s statement and fend off the opposition attack, prompting Freeland to mention vaccines no fewer than nine times in her speech Monday.
“Safe, effective and plentiful vaccines are on the way,” Freeland said.
The 223-page fiscal update plan includes not just once, but twice, a chart that shows Canada has procured more doses per person (nearly 11, if every vaccine on the list is approved) than any other country in the world.
But there was no new information in the economic update on when or how those doses will be available to Canadians.
O’Toole said without a plan for a vaccine there is no plan to save the economy.
NDP Leader Jagmeet Singh said the plan provides too little to directly help people, and without a solid plan for a vaccine rollout, that kind of help is even more critical.
“That light at the end of the tunnel now feels like a longer, darker tunnel,” he said.
Freeland’s plan does include billions in new spending to try to bridge people and companies through until vaccines can end the pandemic. That includes some new aid for hard-hit sectors like tourism and entertainment, a simplified tax credit for Canadians now working at home, and another $1 billion to help provinces with the long-term care homes that have left our oldest citizens tragically vulnerable to COVID-19.
Opposition parties were quick to take credit for some of it. O’Toole said a $1,200 payment next year for parents with kids under six was taken right out of his leadership campaign platform.
Singh said the Liberals have added many measures because of his party’s efforts, including paid sick leave. While the plan promises to cancel interest payments on federal student loans next year, Singh said that stops short of the NDP motion all parties backed last week to restore the moratorium on all loan repayments until May.
The Liberals had stopped requiring Canada Student Loans to be repaid in April but that holiday ended Oct. 1.
Freeland also threw out another olive branch in Ottawa’s often difficult relationship with provincial premiers by promising to answer their years-long call to overhaul the fiscal stabilization fund that sends federal cash to provinces facing serious drops in revenue.
The premiers joined forces to demand the fund be overhauled a year ago, and Freeland has now complied, nearly tripling the amount of money available, and pledging some changes to how much provincial revenues must fall before they can be eligible for it.