Finance Minister Bill Morneau has provided Canadians with an economic and fiscal snapshot into the government's spending amid the COVID-19 pandemic. And what the country learned is that the federal government’s deficit is expected to hit $343.2 billion and the debt-to-GDP ratio is projected to rise from 31 per cent to 49.1 per cent by the end of the fiscal year.
"The temporary measures implemented through the government’s economic response plan will have a significant impact on the federal deficit (Table 2.4 - see below)...By comparison, this spending level is on par with but lower than the peak deficit (as a per cent of GDP) experienced by Canada during the Second World War. This is truly the challenge of our lifetime. As temporary investment measures come to an end and GDP recovers over time, deficits are expected to retreat." Economic and Fiscal Snapshot 2020
The Government's COVID-19 Economic Response Plan helped protect Canadians and their families through a variety of health and safety measures while at the same time, providing direct support to employees, their employers and other businesses. According to this snapshot,
the Canada Emergency Response Benefit (CERB) has provided over $53 billion in benefit payments to 8.16 million individuals;
the Canada Emergency Wage Subsidy (CEWS) has supported about three million employees;
the Canada Emergency Student Benefit (CESB) has provided over $1.4 billion to over 600,000 applicants;
688,000 applicants have been approved for the Canada Business Emergency Account (CEBA) and given a total of $27.41 billion, including $7 billion of which is forgivable if the loan is paid back before December 31, 2022;
the Canada Emergency Commercial Rent Assistance (CECRA) program saw applications representing over 29,000 small businesses with over 209,000 employees, and total requested funding of over $221 million; and
through the Business Credit Availability Program (BCAP), 148 guarantees have been confirmed for a total loan value of over $303.59 million.
CPAC has posted the Special Committee of the Whole and it can be viewed here. To watch Finance Minister Bill Morneau's speech in the House of Commons, scroll to the 43:33 minute mark.
From the desk of Neil Brodie, Vice President
The numbers in the Economic and Fiscal Snapshot reflect the emergency response to the measures taken in response to the pandemic. Nowhere in the Snapshot was the spending plan for the recovery phase mentioned. It is widely expected that the government will add to the deficit to fund recovery programs to help economic growth through the Fall and into 2021.
Canadians understand the uncertainty in the economy now. A forecast may only have a shelf life of a few months, but a forward-looking statement would have helped all Canadian industry to plan. The uncertainty that flows from the absence of that may be reflected in the recovery expected in the second half of 2020.
The opposition parties will continue to call on the government to provide its regular fall Fiscal Update. Conservative leader Andrew Scheer and finance critic, Pierre Poilievre continue to ask for a credible plan for re-opening the economy. They are citing the UK, France, Germany and Japan as countries that have announced road maps to recovery. Alberta announced its recovery plan last week, and, today, Ontario put forward a limited recovery plan as well. Whether this was coordinated by like-minded parties or pure happenstance it allows Conservatives to hold the high ground in the recovery plan arena.
The immediate response from the Bloc was a call for more federal money to flow to the provinces. The federal government announced $14 billion in funding to flow to the provinces. All the premiers have expressed the position that this amount does not cover the increased costs of the pandemic. For the NDP, their concern was that more government money should be flowing to marginalized individuals and that taxation should be raised on corporations and higher-income individuals. This message is in line with their call for two weeks of paid sick leave for all Canadian workers which the Liberal minority government agreed to consider in return for the NDP support for confidence votes in the House of Commons this spring.