On July 8, Canada’s finance minister, Bill Morneau, announced that the country’s deficit would rise to 343 billion Canadian dollars ($255 billion) this year. This is Canada’s largest deficit since World War II. The fiscal “snapshot” — an update on the state of the country’s finances, short of a full accounting — indicates that for the first time in its history, the country might see its debt surpass 1 trillion Canadian dollars ($744 billion) by 2021.
Days later, the story was displaced from the headlines by the WE scandal — a now-canceled contract between a charity and the federal government that was quickly mired in controversy after it was discovered that the organization has paid members of Prime Minister Justin Trudeau’s family for speaking engagements. The WE scandal deserves attention, but not at the expense of other issues. Canada’s fiscal situation merits sustained attention and scrutiny as well.
The sticker shock of the numbers is quite something in itself. But moving beyond that, a few considerations explain the necessity of the spending, temper concerns and point toward some ways Canada can move forward inclusively and sustainably.
Governments around the world are spending during the covid-19 pandemic in an effort to keep individuals employed and businesses open. Spending is central to the strategy of attempting to put the economy into stasis and buy time. A third of a trillion dollars in deficit spending is, plainly, not ideal. A depression, just as plainly, is worse. And that is why Canadians ought to embrace the fact that the country, as Maclean’s writer Nick Taylor-Vaisey reports, “doled out the most direct fiscal support of any G7 nation.”
For now, the debt is manageable. Ottawa banks are recording record-low interest rates, which makes carrying it less of a burden than if rates were higher. Rock-bottom rates might not last forever, but for now, they give the country time to stabilize and manage the pandemic. And we are still in much better shape than the crisis levels of the 1990s, when Canada’s debt-to-GDP ratio hit 66 percent. At this time, Canada’s debt-to-GDP ratio will rise to around 38 percent. With careful planning, that is manageable.
But Canada is in mid-moment, and the variables that will condition the ultimate outcome of this spending are still to be determined.
First, while the country cannot directly control how long the pandemic lasts — a key variable — Canadians can control compliance with physical distancing, hand-washing and mask-wearing. And the provinces and territories can control reopening plans. Prudent plans will see jurisdictions reopen slowly, based on the best evidence available and best practices known. Diligent compliance will make those plans sustainable — and bearable. This is especially true as we consider a potential second wave of infections, and as case numbers in Canada begin to increase once more.
Next, the pandemic is a challenge, but also a critical juncture — as are the deficit and debt. This is a moment where things can, and in some cases must, change. Above all, Canada must resist the temptation to implement austerity measures, which can do harm in the short and long term. Indeed, past austerity measures might have exacerbated the effects of the pandemic. Beyond that, the government ought to consider new revenue by way of a wealth tax and tackling offshore tax havens used by wealthy individuals and firms, as well as by tackling tax-dodging. There’s gold in those hills.
Canada must also take this moment to consider big, transformative ideas — and to draft, test and roll out the best of them. One such idea is a universal basic income. Canadian senator Yuen Pau Woo has already suggested as much, arguing that now is the time to pilot a project, which would cost somewhere between 47.5 billion and 98 billion Canadian dollars ($35 billion to $73 billion). This is not cheap. The parliamentary budget officer has indicated, however, that program offsets could reach 46 billion Canadian dollars ($34 billion), although offsets ought to be chosen carefully with an eye to avoiding doing harm to marginalized folks and communities.
A Green New Deal is another option. As political ecologist Claire O’Manique argues in Ricochet, “A Green New Deal recognizes that only through expanding justice and equity for all will we be able to address the roots of the climate crisis and embrace solutions that not only safeguard us from the climate crisis but also improve the living conditions of the majority.” At this crossroads, a Green New Deal might not only help us address the existential threat of climate change, but also open up economic life in inclusive, sustainable ways to mitigate or even avoid future crises, while also improving day-to-day lives for decades to come.
The federal government has warned that this moment might lead to a “permanent change” in our economic lives — and thus our lives, full stop. Some of those changes will be difficult and undesirable. But while the deficit and debt ought to be taken seriously, we can, with foresight and courage, not just manage them but also leverage them to transform Canada for the better.
إخلاء المسؤولية: الآراء الواردة هنا تعبر فقط عن رأي الكاتب، ولا تمثل الموقف الرسمي لـ Followme. لا تتحمل Followme مسؤولية دقة أو اكتمال أو موثوقية المعلومات المُقدمة، ولا تتحمل مسؤولية أي إجراءات تُتخذ بناءً على المحتوى، ما لم يُنص على ذلك صراحةً كتابيًا.
اترك رسالتك الآن