Canada's economic immunity system has been compromised at a critical time in world affairs, and there is little sign that the federal government will be doing anything meaningful in its upcoming budget to help it recover.
As the Fraser Institute has recently pointed out, the Justin Trudeau government has set a new federal government high-water mark for per-person spending. Even in relatively normal times, that would trigger alarm bells among economists who value the country’s long-term financial integrity.
But these are not normal times.
Atop the impact to Canada’s cash flow from an already decelerating global economy and the fallout from trade hostilities between its two largest export markets is the rapidly escalating transmission of an airborne virus. The collateral damage sparked by the latter threatens to be colossal.
An updated International Air Transport Association analysis of COVID-19’s impact on the airline industry estimates 2020 global passenger revenue losses alone at between US$63 billion and US$113 billion. And that’s just the airline industry.
So the deficit spending the federal Liberal government has indulged in since it came to power in 2015 will become even more unsustainable than it already was.
The $1 billion in federal government COVID-19 response funding announced last week might provide temporary aid to businesses hardest hit by the virus.
But Finance Minister Bill Morneau’s upcoming budget must do far more to help the country come to grips with a COVID-19 economy that will not be kind to Canada.
As outlined in the C.D. Howe Institute’s Shadow Federal Budget for 2020, the Liberals need to address a long list of issues that range from productivity and competitiveness to taxation and red tape to shore up Canada’s rapidly unravelling economic outlook.
The overriding question for the country is: can a minority government that had leadership issues even when it was a majority make difficult decisions?
The answer, unfortunately, is no.
