As COVID-19 rages, Canadians continue to look to their governments for the supports we need to mitigate the devastating impacts of this global pandemic.
To date, the federal government has been doing the heavy lifting, covering 92 per cent of the $374 billion in direct government costs to combat COVID-19. That includes all federal or provincial measures for COVID-19, from health care to vaccines, corporate tax cuts and jobless supports.
That’s the role the federal government should be playing, given its fiscal capacity: Interest rates are at a record low, the federal debt-to-GDP ratio remains manageable and the Bank of Canada is there as a backstop.
But the impact of COVID-19 isn’t going away any time soon and the anticipated spring federal budget has another $70 billion to $100 billion in store, over and above the $374 billion already being spent.
Even once the majority of Canadians have received the COVID-19 vaccine, the economy will need a jolt to get it kick-started, and those who have been sidelined from the workforce will need new job opportunities. Economic recovery efforts won’t look like typical post-recession efforts because the job losses due to COVID-19 aren’t like typical recessionary job losses.
This time, it’s workers in the service, retail, accommodation and tourism sectors who have been hardest hit by a sharp drop in consumer demand and, as a result, higher-than-normal unemployment.
Usually governments invest in physical infrastructure projects to jolt an economy that has been wounded by recession. Provincial governments, so far, are ahead of the feds, planning infrastructure stimulus programs over the next few years.
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To date, the federal government has committed limited new spending on physical infrastructure outside of the much-needed rapid housing initiative. It did create a new stream to the pre-existing Canada Infrastructure Program, called the "resilience stream." Projects qualifying for that stream enjoy a generous cost-matching split, with the federal government offering to pay 80 per cent, leaving the provinces with only 20 per cent of the bill.
And the provinces are taking them up on that.
(Mouse over the interactive map to see what provinces have planned for infrastructure spending. To see download my full report, please click here.)
But physical infrastructure investments alone won’t solve the problem of COVID-19’s impact on jobs that aren’t in construction and manufacturing. What’s needed are federal commitments to create national standards for long-term care and a national affordable child-care framework. Both of these sectors have been hammered by the pandemic.
Long-term care facilities clearly need greater investments and more stringent standards to keep both precarious staff and frail, elderly residents protected in the short term, as well as more resilient and prepared to face future pandemics — because COVID-19 isn’t the first pandemic threat and it won’t be the last.
The impact of COVID-19 on the child-care sector has been devastating for different reasons. With the collapse of Canada’s job market and many parents working from home while caring for their children during waves of lockdowns, the child-care sector has been pushed to the brink. It was already an underfunded sector to begin with. Federal leadership to create a national, affordable, public child-care program would help parents re-enter the labour market and, frankly, reflect the needs of parents and children in the 21st century.
If COVID-19 has taught us anything, it’s that neither long-term care nor child care should be left to profit-seeking entities. Look for signs in the spring budget to see just how seriously the federal government is taking this dual threat and opportunity.
Provincial cost-matching (or lack thereof) in the federal government’s Safe Restart agreements should be instructive on this front. When it came to the provinces matching federal support for municipal operating and transit budgets, far too many provinces realized they didn’t actually have to match the funds to get the federal component.
Hopefully, the federal government will ensure future transfers to the provinces come with clear conditions in order to leverage those funds, to push the provinces to spend the monies on the supports the feds intended to fund.
In many ways, we have seen the tale of two pandemics in Canada — where the richest 20 per cent of Canadians are doing fine and the poorest 20 per cent have fallen further behind.
Here, too, we’ll be looking to the federal government to ensure better income supports — and income adequacy — for the unemployed, underemployed, those with disabilities and those who will require long-term sick leave due to COVID-19. We’ll be looking for greater skills training supports to help young, low-income and marginalized workers join the economic recovery effort.
The federal government has done much of the heavy lifting — even more is required.
David Macdonald is a senior economist with the Canadian Centre for Policy Alternatives.