Tag Archives: Budget 2020

Roundup: More deficit vapours

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The deficit pearl-clutchers have continued their parade through the op-ed pages of the nation, and some of them worry that the government’s planned green and inclusive recovery package could cost *Dr. Evil finger* ONE HUNDRED BILLION DOLLARS! Some of the usual suspects are getting the vapours over this, so here are a couple of reality checks to start your long weekend off with. Enjoy.

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Roundup: Getting the deficit vapours

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Prime minister Justin Trudeau was back making the media rounds yesterday, and one of the things he spoke about was the “ambitious green agenda” to be laid out in the Throne Speech, which has every pundit in the country clutching their pearls about the state of the deficit. Why? Because in Canadian punditry – and many government departments, finance especially – it is 1995 and will always be 1995. And some of that comes with the usual ridiculous assertions about comparing the nation’s finances to a household’s, or that of a business.

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And then there was one column in particular which doubled down on not only the usual deficit vapours, but the notions that somehow inclusive growth isn’t a real strategy, which credible economists – and not just those on speed dial for certain media outlets who have one answer for every problem – will tell you is a bogus argument. But hey, it’s 1995 and will always be 1995.

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Roundup: Pearl-clutching about the deficit

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For the first time this week, prime minister Justin Trudeau held a presser, wherein he praised the agreement with the First Nations on moving ahead with transferring control over child welfare, mentioned the virtual Cabinet retreat that was held over the previous two days, and mentioned that new pandemic modelling was on the way, noting that there are still hot-spots around the country. And then it was the takeaway message of the day – a mere couple of hours away from the fiscal “snapshot” being delivered, Trudeau made the case that they chose to support Canadians rather than leaving them to fend for themselves, and that the cost of doing nothing would have been far greater on both healthcare and the economy. He reiterated that this was not the time for austerity, but that they have been building a “bridges” to a stronger, more resilient Canada, and drove home the point that the federal government took on debt so that ordinary Canadians wouldn’t have to. He pointed to the low debt-to-GDP ratio, and that historically low interest rates mean manageable borrowing costs. And with one final word on Bob Rae being appointed to the UN, he took questions, one of the first of which determined that he didn’t recuse himself when the WE Charity sole-source contract came before Cabinet, which is something the Ethics Commissioner is looking at. He spoke about the necessity of childcare, that Bill Blair has been engaged on the subject or the RCMP and police brutality as part of the broader Cabinet workplan on combatting systemic racism, that they were following the recommendations of the Auditor General on CBSA, and then reiterated again that with historically low debt-servicing costs, it was easier for the federal government to take it on in order to prevent Canadian households from having to do so. When asked about the relationship with Donald Trump, Trudeau once again reiterated that they have concerns about the possibility of new tariffs, and that it will only hurt American industry because they need Canadian aluminium as they can’t produce enough of their own.

And then the fiscal “snapshot.” While Bill Morneau’s pabulum-heavy speech was pretty much all self-congratulation and a recap of measures they’ve taken, the accompanying documents did show a $343 billion deficit projected for this year (though it has been speculated that this was an outer bound limit designed for them to come under), and that the total debt by the end of this fiscal year could be $1.2 trillion – numbers everyone clutched their pearls about while ignoring that the debt-servicing costs continue to decrease even though the size of the debt has increased. There was mention that the wage subsidy is going to be extended, but with modifications on the way “sooner than later,” but there wasn’t much indication about the broader recovery plan thus far.

Of course, the obsessions among all of the media coverage was the deficit and debt figures, because our reporting narratives remain firmly affixed in the mid-1990s, and no one can break free of them – not to mention the hyperbolic mentions about how this was the biggest deficit since the Second World War (never mind that this is a virtually unprecedented global pandemic we’re facing with a demand-side shock that people can’t seem to wrap their heads around). And because the framing devices remain in the 1990s, headlines obsessed that there wasn’t a plan to curb spending – because of course we know how the epidemiology of this pandemic is going to play out until we get a vaccine at some point in the future. But perspective? You need to turn to the economists on Twitter for that.

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Roundup: Hot and Bothered for Basic Income

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The idea of a Basic Income has been a hobby-horse of parliamentarians for a while, and yesterday the Parliamentary Budget Officer came out with a report that purported to cost one out in a couple of different scenarios. But it’s a bit of a horror show of a report because what it’s actually describing is a cash transfer and not an actual Basic Income scheme, and more than that, some of the things it purports to strip in order to pay for its high price tag are a number of disability supports. Remember that while a Basic Income may sound like a left-wing idea, there is plenty of right-wing support for it if it dismantles the welfare state, where replacing tailored disability programmes with a one-size-fits-all cash transfer is a feature and not a bug. (More from economist Mike Moffatt here).

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Suffice to say, this report got some senators all hot and bothered, including Senator Yuen Pau Woo, who put out a press release on the topic, calling for a pilot project, so here’s Lindsay Tedds, who worked on BC’s Basic Income project for the last two years, and who knows a thing or two about Basic Income.

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Roundup: The ritual fiscal demands

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With the fiscal “snapshot” on the way on Wednesday, we are seeing the ritual demands of opposition parties being laid out – the Conservatives demanding accurate fiscal forecasts, a proper picture of the deficit and debt, and changes to CERB that they claim will keep it from being a disincentive to work. Oh, and to basically deregulate the energy sector, as though it’s regulation and not the price of oil and a global supply glut that are the cause of a drop in investment. The Bloc want CERB phased out except for the arts, hospitality and agriculture industries. And the NDP want the programmes extended and to be financed by down on tax havens – because that can be done unilaterally and at the drop of a hat!

Of course, the biggest problem with the economic recovery is education and childcare, the lack of which threatens to set women’s participation in the labour force back by 40 years, and yet most of the provinces don’t seem to be too motivated by this fact, as they allow school boards like those in Ontario to come up with cockamamie plans like having kids in school for two days a week. And the worst of it is when you have provinces demanding federal help for things that are explicitly in their jurisdiction like education and childcare – which the federal government has made clear is part of the $14 billion they have on the table – but they don’t want the strings attached. “Just give us the money,” Doug Ford demanded, which isn’t how this works.

And to drive home the point, economists like Jennifer Robson have calculated that keeping these women out of the workforce cuts household incomes by 40 percent, or $113 billion in direct earnings (to say nothing of lifetime earnings), which is a devastating blow to the economy. Would that these provincial governments didn’t assume that it’s fine that they have loaded this onto the shoulders of women in the workforce, and that there won’t be any consequences. It’s time for provinces to behave like grown-ups and make some adult decisions that include women in the labour force.

https://twitter.com/MikePMoffatt/status/1279931083430285312

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Roundup: Honest mistakes and sticking points

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Prime Minister Justin Trudeau’s daily presser was far more lacklustre yesterday in terms of announcements – mostly just an update on how many more shipments of personal protective equipment have arrived, and contracts that have been signed with domestic producers in order to supply more. There was a little more action in the Q&A – on the question of proposals when it comes to punishing fraud for CERB, Trudeau insisted that this was only about people for whom there was demonstrable intent for fraud and not honest mistakes, though that is not reassuring to everyone. On the lack of a fiscal update, he insisted that things were still too much in flux because we have no idea how the economic restart is going to look like, but then went into his song and dance about just how open and transparent they’ve been because they take questions from the media every day and at the special COVID committee in the House of Commons, except that those are more about the performance of asking questions and less so about providing substantive answers (but being performative on transparency is on brand for this government). Part of the fiscal update measures was wrapped up in a “but the deficit!” moans from one reporter, whom Trudeau did rebuke a bit given that we are in an era of historically low interest rates. On MP Marwan Tabbara, he reiterated that he only found out about the arrest on Friday (and while people don’t believe that, we have to remember that the leader’s office doesn’t track every MP like a convict, and they’ve all been somewhat preoccupied with the pandemic – and it was up to Tabbara to disclose to them). On body cameras for the RCMP, Trudeau said that the was only one measure among many they were discussing, which gives him a bit of wiggle room as this becomes an issue of debate.

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The issue of the penalties for fraud with CERB look like they will be a sticking point with the NDP, no matter Trudeau’s assurances that this is not about people who made good-faith mistakes, and that it aligns the penalty regime with people who defraud EI (but without all of the same accountability measures for defence – and it should also be noted that the EI fraud rate is about two-to-three percent). And funnily enough, it seems like some of his own MPs aren’t keen on this either. This could be the kind of punitive measure that will get the Conservatives on-side, but they will be objecting to the fact that the bill will be attempted to get passed in one fell swoop today rather than with a proper legislative process, and the Bloc don’t appear to want to play ball because they want even more measures for seniors, so this could start getting sticky for the government. I guess we’ll have to see what compromises got made, and what deals were cut.

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Roundup: Suspension, and abrogation

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In a week where the news was coming at you like a firehose, Friday was possibly triple that. I literally sent from one press conference to another for a period of five hours. But to start the day off was the news that the House of Commons was indeed going to be suspended for five weeks (really only the loss of two sitting weeks), and they had arranged to complete passage of the New NAFTA implementation bill first thing, which was fine, because they were already on the last scheduled day of debate and the Senate had already done pre-study. What was a problem was the fact that they proposed two – two! – supply bills worth tens of billions of dollars and rammed them through both houses at all stages with zero debate and zero scrutiny, because the House leaders came to an agreement on them. And while absolutely everyone fell all over themselves to talk about how great it was that the parties all came together to ensure that they acted responsibly in suspending parliament (though I think it was premature), the business of supply is the whole gods damned purpose of Parliament. Instead of it being taken seriously, they rolled over on it, and rammed it through, along with another bill to give the government any additional spending authority it needs without parliamentary oversight for the duration of the suspension. Oh, but don’t worry – they’ve ensured that the Auditor General will keep an eye on things after the money has already been spent. Good job on ensuring that the barn door closes after the horses bolt, guys. You’ve totally got the whole gods damned point of Parliament down pat. There were far better options than a wholesale suspension and abrogation of the fundamental responsibility of parliamentarians, but that’s where we are. You get the slowest of slow claps for this particular move.

From then on, it was one after another. Chrystia Freeland and several ministers held a press conference to announce further measures, such as cautioning against all foreign travel, news that they were going to ensure that all international travellers were routed through a smaller number of airports in order to maximize the available resources of CBSA, and the suspension of cruise ship season. Then Justin Trudeau held a presser from outside of Rideau Cottage to update his own situation and to reiterate some of the same messages that were just delivered. And then Bill Morneau, the Governor of the Bank of Canada, and the Superintendent of Financial Institutions held a joint press conference to talk about immediate economic stimulus – including another surprise fifty-point basis cut from the key interest rate – and the promise of yet more fiscal measures to come next week (because they are likely operating flat out and need the weekend to pull the details together). Oh, and the budget date has been postponed until sometime after Parliament resumes, whenever that may be.

Meanwhile, Colby Cosh says that while we’re still awaiting the full impact of COVID-19, the rapid pace of technological development means that this could be the last major global pandemic. Chris Selley cautions about feeling too smug about our healthcare system under the current circumstances. Kevin Carmichael walks through some of the fiscal and monetary measures announced today, and offers thanks to the Bank of Canada for being the rock that Morneau and Trudeau have not been. Heather Scoffield is impressed by the coordination between Morneau, the Bank of Canada and OSFI in staving off “economic hibernation,” and hopes for similar cooperation in combatting COVID-19. Economists Armine Yalnizyan and Jennifer Robson have some suggestions for how to help workers affected by the COVID-19 outbreak. Here’s a thread from Kevin Milligan on the use of EDC and BDC in these kinds of situation.

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QP: A day late to the concerns of the nation

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After news that the prime minister was in self-isolation after his wife was sick, and Jagmeet Singh also stated that he was self-isolating after feeling “unwell,” the business of parliament carried on. Andrew Scheer led off, mini-lectern on desk, and he gave his best wishes to the PM — for which he got applause — and then demanded more “decisive action” and claimed that passengers arriving from Italy were not screened, ignoring the pertinent information that everyone was screened before they were allowed to board. Chrystia Freeland addressed all Canadians to trust in the advice of medical experts, that things will get worse for it gets better, and that we are well prepared. Scheer raised potential shortages around equipment like ventilators, to which Freeland stated that the federal government was leading a bulk national procurement effort and they were working together with provinces and territories. Scheer lamented the lack of mandatory screening, quarantines or travel restrictions and demanded the evidence for those decisions. Freeland gave a bromide about our public health system, and assured him that enhanced measures were in place, and that they were following the advice of science. Alain Rayes demanded a plan to prevent large public gatherings, and Freeland repeated her first assurance for all Canadians in French. Rayes then demanded more “concrete measures” for workers who lose their jobs as a result of the outbreak, and Freeland read the changes to EI and promise for new measures as necessary. Christine Normandin led off for the Bloc, and after wishing the PM well, she demanded more resources for border screenings, for which Freeland addressed the PM’s situation, that he wasn’t sick but waiting for his wife’s results. Normandin again demanded “real” screening measures, and Freeland again read that they were following all public health advice. Peter Julian led off for the NDP, and again demanded that every worker who has to self-quarantine gets financial resort, to which Freeland reiterated the $1 billion COVID-19 package and that they were rolling out new measures. Rachel Blaney repeated the question with added condescension, to which Freeland calmly repeated the same response.

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Roundup: Pandemics and aid packages

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It was a day yesterday, where COVID-19 was declared a pandemic, Justin Trudeau announced a $1 billion aid package to deal with the outbreak, Donald Trump announced travel restrictions from European countries, and the NBA suspended their season (if you care about such things). More and more events are being postponed or cancelled, and the markets have entered Bear Market territory.

(Note: Maclean’s has an updated COVID-19 Q&A here).

As for that $1 billion package the government announced, one of the missing pieces are measures for workers who can’t access EI or sick leave when they are forced to self-isolate, which the government says they’re working on. As for Parliament, it does indeed have a pandemic plan, but it’s still early when it comes to deciding what portions of it need to be activated, and that can include suspending the Chamber’s sittings, but that would require some kind of negotiation with the other parties as to when to pull that trigger, and its duration.

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Meanwhile, Supriya Dwivedi worries that we aren’t warning people enough of the risk coming from the US, given how much of a gong show their healthcare system is. Susan Delacourt takes particular note of Trudeau’s language in asking Canadians to play their part to “flatten the curve” of the spread of the virus. Colby Cosh delves into some of the failure of the US’ centralized Centres for Disease Control in the early stage of the COVID-19 transmission. Heather Scoffield says that adequacy of Trudeau’s $1 billion COVID-19 package won’t last given the state of the economy.

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QP: Amateur hour conspiracies in the face of a pandemic

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Wednesday, caucus day, and while all of the leaders were present, the benches were not nearly as full as they usually are on caucus day. Andrew Scheer led off, mini-lectern on desk, and he immediately blamed Justin Trudeau for the weak economic growth figure, listing a bunch of disingenuous items that counted as “proof.” Trudeau stood up to talk about investing in Canadians, lifting a million people out of poverty while having the strongest balance sheet in the G7. Scheer listed a bunch of things that the government spent on what were framed in a disingenuous way, to which Trudeau reiterated his previous points. Scheer listed yet more false points about Harper’s record versus this one, before demanding tax cuts and the elimination of “red tape,” and Trudeau got a bit indignant in defending the Canada Child Benefit while calling out Scheer for petty politics. Scheer raised the Berskshire Hathaway pullout from the Quebec LNG plan, to which Trudeau reminded him that the very same company just invested in a wind farm in Alberta. Scheer changed to French to then accuse him of striking a secret deal with the Bloc go keep them from re-opening the Double Hyphen Affair in committee, to which Trudeau stated that he defended jobs while standing up for the legal system. Yves-François Blanchet stood up for the Bloc, and stated that they blocked the committee study to prevent another round of people screaming that all Quebeckers were corrupt, before he switched to COVID-19 measures, to which Trudeau reminded him that they have been taking all measures that their scientific advisors stated. Blanchet demanded more border restrictions, daily press briefings and more purchasing power for seniors, and Trudeau reiterated his reassurances. Jagmeet Singh was up next for the NDP, worrying about workers who can’t access EI, and Trudeau assured him that they are working on additional measures. Singh repeated the demand, and Trudeau reiterated that they would be there for all Canadians.

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