Once upon a time, not so long ago, the Liberal government planned a postpandemic, pre-election budget. It would land at the height of spring, and be all about the big, bright capital-F Future.
COVID-19 had other ideas. Last week was arguably the pandemic’s darkest, and worse lies ahead. It leaves Finance Minister Chrystia Freeland to perform a difficult balancing act. Her eyes may be on the stars, but the country is stuck knee-deep in the mud. So how to assess her fiscal plans, which land on Monday afternoon?
Pandemic assistance: At some point, Ottawa is going to be able to terminate its costly programs supporting people and businesses hit by COVID-19 shutdowns. But that date is not yet in sight. What’s more, Ottawa has to improve the one temporary income-support program that’s also a key public-health measure: the Canada Recovery Sickness Benefit. A better sick-leave program, so essential workers are fully incentivized to stay home when ill, will help curb the virus.
Preventing a next wave: Politicians love handing out giant cheques; the more zeros the better. But as shown by the most successful pandemic-fighting provinces – take a bow, Atlantic Canada – public health is mostly not about money. It’s about wise choices and targeted resources. Done right, it saves far more than it costs. When Canada finally suppresses COVID-19, the country is going to need tools to prevent its re-emergence. That likely includes new vaccines or boosters in the years to come, along with significant domestic manufacturing capacity. It includes surveillance systems, like the Global Public Health Intelligence Network (GPHIN) that Ottawa unplugged prior to COVID-19. It also includes border screening, a subject with which the Trudeau government has always been strangely uncomfortable.
Thanks in part to vaccines, Canada will in the coming months greatly lower its number of domestic infections. But vaccines aren’t 100 per cent effective, and viruses mutate. Smart screening of travellers may be needed for some time to come, to reduce the risk of viruses being reintroduced. Pandemic border security is insurance against the need for future economic shutdowns.
All of that is part of the future the Trudeau government must prepare for. But there’s also the postpandemic era.
Child care has become a government priority, but it’s in provincial jurisdiction. The one province with a universal child-care program is Quebec; if Ottawa offers to put up funding to take the model national, the provinces – particularly Quebec – may find it to be one they can’t refuse. Ms. Freeland’s pitch will be that spending on child care will pay for itself in the long run, by growing the labour force, economic output and tax revenues. But as with all government programs, the details are everything – how it’s designed, and whether it delivers the most and best child care for the fewest dollars.
Greening the economy is also a Liberal priority. But there are many ways to do that, some more effective than others. Voters are enticed by such things as subsidies for (mostly higher-income) people to buy electric cars; politicians tend to see the environment as opportunity for industrial strategies. Both approaches have a habit of delivering low-return boondoggles. To the extent that the Trudeau government’s primary green tool remains carbon pricing, along with judicious use of mostly unseen industrial regulations, it’s largely on the right track. To the extent green becomes a cover for industry subsidization schemes, questions are in order.
Pharmacare: It’s an issue the Liberals have been raising for years, and putting off for just as long. Done right, it would improve the health of Canadians while aiding the economy, by removing a significant cost from employers. It could even raise wages, by driving down employer health costs. It’s a tall order, and not every plan will do the trick. Plus getting anything done means negotiating with the provinces. But universal drug insurance – and while they’re at it, universal dental insurance – is something the Liberals should stop jawing about and start doing.
Fiscal guardrails: In the long run, Ottawa will need guideposts, like the old rule of deficits in nonrecession times that are small enough to ensure a declining debt-to-GDP ratio. In the short run? Ms. Freeland has room to borrow for one-off infrastructure spending, and productivity-boosting measures. But new and ongoing programs need a plan for how they’ll be paid for, once free money is no longer on the menu.
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