Canada

Wednesday, July 8, 2020 - 14:11

MNI POLICY: TEXT: Canada Fin Minister Fiscal Speech Highlights


By Greg Quinn

OTTAWA (MNI) - Following are highlights of Canadian Finance Minister Bill Morneau's speech to Parliament to deliver a fiscal snapshot Wednesday:

Through rapid and broad support, our government has been able to protect millions of jobs, provide emergency income support to families, and help keep businesses afloat during the worst of the storm.

This support is helping Canadians get back on their feet, and has prevented long term damage. But this pandemic is not over and we cannot let up on our commitment to one other.

Forecasts are always uncertain. So with this Snapshot, we are providing our best prediction of the economic situation in Canada to the end of the current fiscal year, to March 31st, 2021. Trying to predict further would be potentially misleading.

The possibility of further outbreaks looms on the horizon, and accurate long term forecasting is impossible in such a volatile environment.

We know that the best economic policy continues to be containing the spread of the virus. If we can keep the transmission rate steadily declining, we can help ensure a stable and steady economic recovery.

If we don't, the gains of our sacrifices these past four months will be lost. Around the world, we've seen what happens when reopening is rushed. Our government has understood, from the moment this pandemic began, that it was our role to step in to support Canadians and stabilize the economy.

The COVID-19 Economic Response Plan is the most comprehensive and substantial peacetime investment in Canada's history, representing more than $212 billion in direct support, and nearly 14% of GDP in total support.

Let me give you some numbers. About 3 million Canadian workers have had their jobs supported through the Canada Emergency Wage Subsidy, and that number continues to grow. Over 8 million Canadians were able to pay for groceries and rent because of the Canada Emergency Response Benefit. Over 680,000 small businesses have received interest-free loans thanks to the Canada Emergency Business Account. 15 million low and modest income Canadians have received a special GST credit top-up. 6.7 million Seniors who receive the Old Age Security pension will receive a supplementary payment this week.

And, if there is a resurgence, we are ready to do more.

Faced with the most profound downturn since the Great Depression, our government acted to support the economy. Every investment we made was in response to the COVID-19 crisis and was time limited.

Some will criticize us on the cost of action. They will point to the size of our deficit for 20-21. It is a testament of the shock that COVID-19 had on our economy. Our government knew that the cost of inaction would've been far greater.

Those who would have us do less ignore that without government action, millions of jobs would have been lost, putting the burden of debt onto families and jeopardizing Canada's resilience.

At a time when Canadian workers and families are facing significant hardship, austerity and tightening your belt is not the answer Our fiscal discipline in the years leading up to this, combined with Canadians hard work and entrepreneurial spirit, meant that Canada was resilient and ready to face this challenge.

With a crisis of this magnitude, someone was going to have to shoulder the costs and the federal government was uniquely placed to take this responsibility on. Over the last quarter century, provincial debt has outpaced federal debt by $225 billion. Households' debt to disposable income has increased to over 175%, close to a record high. To date, nearly 9 of out every 10 dollars in COVID-19-related direct support delivered to Canadians, and to Canadian businesses, is financed by the federal government. We took on this role because it was the right thing to do.

Thanks to our rapid and substantial investments, unemployment will be lower, consumer spending will be higher, and our economy will recover sooner than had we done nothing.

Our investments have meant that Canadians and Canadian businesses, instead of drowning in debt and closing up shop, will be better positioned to get back at it. We came into this crisis on strong footing, with a net debt-to-GDP ratio considerably lower than all of our G7 peers.

Even after our historic investments, Canada will continue to hold its low-debt advantage. This, combined with historically low interest rates, gave us the balance sheet to deploy our fiscal firepower to support Canadians through this.

If we think back to the nineties, when Canada's debt needed to be reigned in, interest rates were high and public debt was extremely expensive. At that time, our public debt charges were close to 6% of Gross Domestic Product.

But now, Canada's public debt charges are only around 1% of GDP. And even after all the investments we have made to support Canadians, the cost of servicing our debt is expected to go lower this year. In fact, our total public debt charges for 2020 will actually be over $4 billion lower than forecast last fall.

But we, the collective we, will have to face up to our borrowing and ensure it is sustainable for future generations. Canada's debt structure is prudent, it's spread out over the long term, and it compares well to our G7 peers.

And we will continue to make sure this is the case in the months and years to come as we move toward recovery and as we deal with the aftermath of this unprecedented event.

The road to economic recovery will be long and uncertain. Going forward, anything we do must be about growth, resilience, and creating opportunity for those who were most impacted by this crisis.

We need to invest in an economy that is greener and more diverse. An economy that creates opportunity for young people, for low-income Canadians, for people with disabilities, for women -- and that supports our most vulnerable, including LGBTQ2 communities, Indigenous peoples, Black Canadians, and other racialized people in our country.

Canadians are resourceful. Canadians are resilient. Together, we will get through this and build a better, fairer, and stronger Canada.

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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