Federal budget should bet on child care and green economy to stimulate recovery
The stakes are high for the Trudeau government’s April 19 budget – its first budget in two years. Large parts of the country are suffering from a deadly third wave of COVID-19, resulting in new lockdowns, stay-at-home orders and more damage to the economy.
Senior government sources tell CBC News the budget will include items that balance pandemic measures and efforts to set the stage for post-pandemic economic recovery – and clues to the contents of the budget can be found in last fall’s throne speech and in the fall economic statement. (FES).
“We have never been so transparent about our spending priorities and our budget trajectory,” said a senior government official familiar with this year’s budget process. “It’s all there in the Speech from the Throne and in the FES.”
Sources say the budget will present a full account of pandemic program spending to date, including the cost of promised extensions of several benefits – the wage subsidy, rent subsidy, and recovery, sickness pay. and care. Some business groups have been pushing for further extensions and they will be looking to see if their demands are met.
But many of these pandemic measures are already in play. Much of the Speech from the Throne “roadmap” is about what’s to come. The FES has committed $ 70 billion to $ 100 billion over three years to stimulate the economy.
Child custody and the “ assignment ”
Sources say a safe guess about this year’s budget is that it will include money to create a national early learning and child care system – because the government promised it in the speech from the Throne and because he believes there is a strong economic case to justify the spending.
More quality childcare places means that more parents – especially women, who typically shoulder the bulk of childcare responsibilities – can enter or re-enter the workforce. Sources say the government sees it as a measure that will ultimately be self-financing through increased productivity resulting from the increase in the number of women in the labor market.
“This is the first budget of Canada’s very first female finance minister in the first self-proclaimed feminist government in the midst of the first-ever global surrender. There is an opportunity here for a new narrative to present and a new way to put it. get it right, ”said economist Armine Yalnizyan, who sits on the government’s task force on women in the economy.
Child care is a provincial responsibility – which means there is a risk that any new federal initiative will end up in bickering between Ottawa and the provinces. A senior government official said it was a question of who had the money.
“The federal government has the spending power. If we set the conditions and the money, the provinces that want to be the first to get started on this issue will join them. Those that do not will have to count with their electorate. “
Fight against inequalities
The pandemic has exposed and deepened inequalities in Canadian society and the economy. The budget should provide new funding for skills training for youth, aboriginal people, women and racialized Canadians.
The budget is also likely to allocate funds to the pandemic-stricken long-term care sector beyond the FES $ 1 billion, for increased access to mental health supports and for other investments in housing. affordable.
The federal government has already made a number of funding announcements as part of its National Housing Strategy – but with the lack of affordable housing and many tenants pushed to the brink of eviction by the pandemic, the budget could put more on the table.
And with real estate bubbles growing rapidly in some cities, the budget also offers Ottawa an opportunity to respond to the overseas homebuyers tax mentioned in the FES.
The government has recognized that the EI system needs to be modernized to include the self-employed and those working in the odd-job economy. Some observers say they hope this means a review is underway.
“We know the EI program … is just too weak,” said former Parliamentary Budget Officer Kevin Page, now president and CEO of the Institute for Fiscal Studies and Democracy from the University of Ottawa. “I expect there will at least be options on the table for Parliament to debate the expansion of the program.”
Small businesses hit hard by serial shutdowns should see a plan in the budget for their survival after the pandemic. Sources also suggest the budget could help the suffering arts, entertainment and tourism industries.
For large industries that suffered heavy losses and called on Ottawa to help – like the airline industry – the budget could at least set aside some cash, although a deal has yet to be announced.
Some stakeholders say the government needs to shift spending towards measures to stimulate long-term growth – to ensure that the rebound does not depend solely on consumer spending, especially given pent-up consumer demand which will erupt once the pandemic is over.
“This is the challenge for Canada, which for a long time we have not been able to maintain growth of more than 2%,” said Robert Asselin, Senior Vice-President of the Business Council of Canada and Director of the Budget under former finance minister Bill Morneau. .
“I’m just worried … if we focus too much on the short term and social spending, we’ll just have a bigger deficit and the economy won’t be positioned the way it might be for the future.”
Asselin said Canada must follow the lead of other developed countries, such as the United States and some European countries, by investing billions of dollars in science, R&D and broadband infrastructure.
Sources say when Prime Minister Justin Trudeau, Finance Minister Chrystia Freeland and other members of government talk about ‘building back better’, they mean stimulus funds will be aimed at building a greener, more sustainable economy . So look for investments in building electric vehicle charging stations, upgrading commercial buildings and older homes and helping natural resource industries switch to cleaner energy.
By investing in greening homes and buildings, the government hopes to create a national home improvement industry and supply chain for products such as energy efficient windows and doors.
What could be left out
In the throne speech, the Liberals said they remained committed to a national, universal pharmacare plan. It is not clear that commitment means money in the budget to move the project forward.
National pharmacare is a key NDP demand, but some budget watchers believe the pandemic could further delay the initiative, as it would require long-term structural spending and negotiations with the provinces – some of which are opposed to the very idea of a national pharmacare program.
What the provinces agree on is their demand for a significant, continuous and predictable increase in the Canada health transfer. Sources say they will likely be disappointed. Trudeau said that while he believes the federal government should pay a larger portion of health care costs, it is a discussion to be held after the pandemic.
“I am really concerned that they are using the pandemic as an excuse not to close the Canada Health Transfer deficit,” said Saskatchewan Finance Minister Donna Harpauer. “But honestly, I’ll be surprised if it’s part of the budget.”
Some provincial leaders say they fear being stuck on health care funding while grappling with federal policy priorities they don’t share, or money for things they don’t think about need.
“I think we need to raise the standards of long-term care across the country, but I don’t want to build a whole bunch of extra nursing homes,” said New Brunswick Premier Blaine Higgs. “Our goal is to keep seniors in their homes for as long as possible and to provide better care to people when and where they need it.
Critics who want a plan to get back to a balanced budget will also be disappointed. The budget is expected to project a downward trajectory for the deficit – which last November was on track to surpass $ 381 billion – but is not expected to offer a timetable for eliminating the deficit.
Freeland vowed to use “guard rails,” such as labor figures, to help the government decide when to turn off the stimulus taps, but did not say where that cutoff point would be. .