No need to panic about the deficit and debt.
Our grandchildren have our backs. Soon as they can talk, they will assure us so.
We will tell future generations the pandemic unfurled a spree when most every pot had to be filled with a chicken. Had to do it.
What they will wonder – and what we wonder today – is how we uncoupled ourselves from government temptation to keep the firehose thundering. Answers are not forthcoming.
As we approach the fifth month of unfettered national largesse, abetted by provincial generosity and municipal beneficence, we can safely conclude our elected officials love pleasing us with our heirs’ money.
Now the question is how this triage turns into stimulation of the economy.
The “snapshot” of the economy provided in recent days by Finance Minister Bill Morneau skips past that. It sets out a best-case scenario of a $343 billion deficit, heavily borrowed upon, and a $1 trillion debt, heavily wagered upon. But it gives no glimpse of the remedies ahead.
There are three sectors of the economy intersecting with government (let’s be honest, taxpayer) assistance: those who need help, those who do not need help, and those it will not help. To date programs have likely kept terrible businesses alive and failed to keep excellent businesses afloat; such is the plight of hundreds of billions of dollars let off the leash, bound to roam, sniff and soil whatever is in sight.
We have seen a lot of TikTok in the pandemic, but there is a tick-tock we need to attend. It’s coming from the clock on the CEWS, the Canadian Emergency Wage Subsidy program that subsidizes three-quarters of a wage up to $847 weekly. It’s due to expire at the end of August and it is not too soon to recognize it will be needed far longer.
Businesses were slow to download the program, but Canada should be very slow to offload it. There are few signs of a recovered economy in the meagre reopening, the hot mess with our major trading partner to the south, and the unintended consequence of the CERB, the Canadian Emergency Response Benefit, in planting doubt on the value of returning to work. The tragic irony is that the doubts linger mainly with young people, the most economically damaged by the pandemic with the harder road back to employment.
These dual quandaries – extending a business subsidy, presumably with conditions, and mitigating an individual benefit, also presumably with conditions – are the beguiling subplots for a federal government that has in recent days spun the staggering spending numbers by saying this is not the time to focus on them. It is, in the finance minister’s view, time to talk about saving jobs.
Well, fair enough, so in the interests of the workforce, extend CEWS to bolster demand and rein in CERB to bolster supply.
But let’s also start the path to granular support. Certain sectors will recover more steadily and reliably, certain ones will take longer. Get some specific programs in place to demonstrate that there is a stability and predictability upon which to count. Tailor support, broker some tax incentives, encourage manageable risk in the system – in other words, rekindle a startup culture widely to reflect the reinvention that many sectors are undergoing.
Few expect a return to February, so six months later, let’s stop pretending we can.
And let’s be sanguine while we are also in a relative advantage as a country on the coronavirus: we have no reason to doubt we won’t be smacked down by subsequent waves inflicted or self-inflicted. While we’re in the business of usurping the financial flexibility of subsequent generations, let’s get a guarantee that the insurance is there for the pre-vaccine period.
The period we are in of not just coping, but living with COVID-19 is also an opportunity to be planning with COVID-19. It isn’t going away, nor should the support necessary to keep our noses above water with the many waves.
To the mandarinate of Ottawa and Victoria, you’ve done reasonably well to prevent the disaster from becoming a catastrophe. Now it is time for your economic engineering to inspire another step – to prevent stasis from setting in, to incentivize innovation, to appeal to the country to rebuild.
But, much as it might seem a weakness of will, when there is any uncertainty about the availability of the net, you can hardly expect employers to walk the tightrope.
Kirk LaPointe is publisher and editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.
