Coronavirus Update: Fiscal snapshot projects federal debt to climb above $1-trillion; $343.2-billion deficit

Good evening, here are the coronavirus updates you need to know tonight.

Top headlines:

1. The federal government forecasts a deficit of $343.2-billion this year after massive emergency spending in response to the pandemic
2. Trudeau did not recuse himself from government’s WE contract decision despite family’s multiple ties to the charity
3. British government will split restaurant and pub tabs in hopes of boosting suffering hospitality sector

In Canada, there have been at least 106,366 cases reported. In the past week 1,927 new cases were reported, 12-per-cent fewer than in the previous week. There have also been at least 70,161 recoveries and 8,731 deaths. Health officials have administered more than 3,207,702 tests.

Worldwide, there have been at least 11,829,602 cases confirmed and 544,163 deaths reported.

Sources: Canada data is compiled from government websites, Johns Hopkins University and the COVID-19 Canada Open Data Working Group; international data is from Johns Hopkins University.

Coronavirus explainers: Updates and essential resources • Coronavirus in maps and charts • Lockdown rules and reopening plans in each province

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Coronavirus in Canada

• The top health official in Nova Scotia revoked the travel exemption for workers at Halifax-based Irving Shipbuilding that allowed them to cross the Canada-U.S. border.
• Ontario reported 118 new cases and nine more deaths. Eighteen of the province’s 34 public-health units reported no new cases. Premier Doug Ford said he will make air conditioning mandatory in long-term care homes.
• Quebec reported 13 additional deaths, bringing the province’s total to 5,603. It also reported 82 new cases, bringing the total to 56,079.

In Ottawa, the federal government forecast a $343.2-billion deficit this year, which will push the federal debt through the $1-trillion mark for the first time. In the last fiscal year, the debt was $716.8-billion.

• The Parliamentary Budget Officer’s last update, in mid-June, estimated the deficit to be $256-billion before the eight-week extension of the Canada Emergency Response Benefit. Pre-pandemic, Finance Minister BIll Morneau projected a deficit of $28.1-billion.
• The $343.2-billion deficit figure represents 15.9 per cent of GDP, bringing the federal debt-to-GDP ratio to 49.1 per cent. It is almost the same size as total federal spending in a normal year.
• The larger deficit is mostly due to a $71.1-billion drop in tax revenues – twice the decline during the global financial crisis – and $227.9-billion in direct spending, tax measures and adjustments to the forecast.
• The government argues the larger debt load is manageable because of historically low interest rates – rates they will keep by increasing the percentage of debt that is issued through long-term bonds.
• The snapshot says April was the economy’s grimmest month, adding the “worst is behind us,” but that any recovery will be “uneven and gradual.”

This was the government’s first fiscal update since a pre-pandemic report in December, 2019. Mr. Morneau said the government will release a budget or full fiscal update in the fall.

Also today: The Prime Minister did not recuse himself from his government’s decision to award WE Charity the now-cancelled contract to administer a student volunteer grant program.

• The contract was cancelled last Friday, and the Ethics Commissioner has launched an investigation into Mr. Trudeau’s role to determine if he broke the rules, given he and his wife participate in WE Charity events.
• Mr. Trudeau said cabinet made the final decision on the almost $1-billion program, which he said was first recommended by civil servants, but the Prime Minister didn’t recuse himself from the talks.

A federal website advertising student volunteer positions contains hundreds of positions that may not actually exist.

A “balanced” approach to COVID-19: Some of Canada’s top public-health experts say the country’s focus on wiping out the coronavirus is posing “significant risks to overall population health” as other priorities take a back seat.

Coronavirus around the world

• Britain announced Wednesday that throughout August eateries across the country can offer a 50-per-cent discount on all meals and non-alcoholic drinks from Monday to Wednesday. The government will cover the remainder of the bill up to a maximum of £10, or $17, per person.
• Four months, three million confirmed infections and more than 130,000 deaths into the outbreak in the U.S., Americans are facing long lines at testing sites in the summer heat or are getting turned away. Meanwhile, researchers at Columbia University are working to develop a spit test that would yield results in about 30 minutes.
• Thousands of Serbians protested in front of the Belgrade parliament despite warnings that such gatherings could spread the coronavirus. The evening before, violence erupted when a crowd stormed parliament to protest plans to reimpose a lockdown after a new spike in cases.

Coronavirus and business

As Alberta moves from crisis to crisis – first dropping oil prices, then a pandemic – the condo market in Calgary remains mired in a lengthy slump, even as housing markets in Vancouver, Toronto and Montreal spike.

• In June, condo sales surged 67 per cent over the previous month but remain more than 30-per-cent below long-term averages – and the benchmark condo price has dropped 4 per cent.
• As of the first quarter, new condo prices in the Calgary area have dropped about 21 per cent since 2017.

Also today: In Ontario, the government proposed changes to rental laws that advocate groups say could speed up evictions and lead some renters to lose their housing without a hearing.

And: The Toronto Regional Real Estate Board reported sales climbed 89 per cent in June in the GTA compared with May. Sales are down just 1.4 per cent from June, 2019.

Globe opinion

• Richard Shearmur: “Air Canada’s recent decision to cancel 30 domestic flight routes across the country points to a growing source of COVID-19 inequality on a large geographic scale.”
• Alexandre Laurin and William Robson: “Federal spending and borrowing also crowds the provinces, which are on the front line when it comes to current and future demands for health care. Canada’s ability to service all its debts is already a concern: One of the major credit rating agencies downgraded the federal government just last month. But we need to get beyond the static snapshot. Now, what comes next?”
• Robyn Urback: “Indeed, just as mask-wearers imbibe on their own exhaled carbon dioxide (in fact, that’s why doctors have such bad handwriting – their brains are oxygen-deprived), open-eyed drivers risk irreparable harm to their own bodies. And for what? Just because there is a possibility (key word) that driving with your eyes closed might get someone killed? Well, I need unequivocal proof – absolute certainty – that the inconvenience of keeping my eyes open will save a life. Otherwise, I will continue doing what I’m doing, thank you very much.”

More reporting

• Gilead begins a trial for an inhalable form of remdesivir as a possible treatment for COVID-19. The trial will enroll about 60 healthy Americans aged between 18 and 45 to test cases where the disease has not progressed enough to require hospitalization.
• Researchers are working on the next generation of coronavirus tests that give answers in less than an hour.
• United Airlines is preparing to send notices of potential furloughs to 36,000 U.S.-based workers.
• VIA Rail announced 1,000 temporary layoffs.
• First Person: My first Zoom ‘destination’ wedding was surprisingly fun.

Distractions

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📚 For the reader who would love to travel: These books will take you on a trip through the world’s forests, oceans and skies.

• The Bird Way: A fascinating look at the behaviours of our birds, from avoiding predators to in-flight navigation, from finding food to finding a mate.
• The Journeys of Trees: Combining science reporting and travel writing, the author travels the world to meet people on conservation’s front lines looking at the changing migration of forests.
• The Well-Gardened Mind: Written by a psychiatrist and avid gardener, this book offers a consoling look at how flexing our green thumbs can benefit our health and well-being.

Information centre

• 🎧 Catch up on a personal finance podcast: How to survive the gig economy • How to get out of debt • Is now the right time to buy a house? • Crisis-proof your finances • What you need to know about investing right now
• Rob Carrick’s 10-point checklist of things you should have done by now to protect or improve your money situation. Tips for minimizing damage to your credit score; how to manage retirement anxiety during difficult times; and things to think about if you’re considering home delivery.
• Here are the expectations for self-isolation; tips for managing anxiety and protecting your mental health; what to do if you think you have the virus; and what you can do to help slow the spread of coronavirus. How to break a bad habit (like touching your face).
• The best foods to eat to maintain an immune system-friendly diet; how to keep a healthy diet while working from home; four eating tips when working from home; and five mistakes that might cause you to gain unwanted weight. Here are the essentials to stock up on and how to shop safely for groceries; the best pantry staples; and how to stop stress-eating. What to cook with rhubarb (aside from pie).
• Here’s what you should do if you are newly laid off; how to apply for the CERB, EI and other financial benefits; how the CRA might identify CERB fraud; and other coronavirus and employment questions answered. What to do if your employees don’t return to work because they want to collect the CERB.

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