Beyond the whatever-it-takes pandemic spending, the Liberals promised stimulus spending to come next spring – and we can expect that to be the bones of Justin Trudeau’s re-election platform.
Much of Finance Minister Chrystia Freeland’s mini-budget presentation was about getting through a hard pandemic winter, but there was a narrative arc leading to what comes next. “After winter comes spring,” the economic statement stated. And with spring begins three years of recovery spending.
That’s when the government will embark on a new program of $70-billion to $100-billion in spending to kickstart the economy, Ms. Freeland revealed, with a coast-to-coast child care program and green spending. It’s a good bet the next election campaign will turn on that.
Sure, most Canadians aren’t looking for an election now – and that’s why Chapter One of the Fall Economic Statement had more detail about vaccine orders than public finances.
But Mr. Trudeau’s Liberals have a minority government, subject to defeat any time, if they don’t pick an election date of their own choosing. A three-year program of extensive postcrisis spending can hardly be anything other than the backbone of their re-election manifesto. Certainly, when Ms. Freeland is drawing up her spring budget, she’s going to have to think of it that way.
Though Ms. Freeland left a lot of her future plans vague, she signalled some political choices. She pledged that the program will include some kind of national, accessible child care plan, but the speech she made in the House of Commons made no mention of pharmacare.
A child care program is a better choice if you are putting together a plan to get the economy rolling and get people back to work, because expanded child care tends to increase women’s participation in the labour force. In her speech, Ms. Freeland framed it as an essential step to making Canada more economically competitive.
But the NDP, the Liberals’ main partner for winning confidence votes in the House of Commons, talk about advancing pharmacare as a must, and have portrayed it as a key condition of propping up the minority Liberals.
There’s also a promise of a green recovery plan, which is supposed to be symbolized by a few measures announced on Monday, such as grants for home refits and spending on electric-vehicle charging stations.
But most of that stimulus program is still To Be Detailed. Ms. Freeland said the priority for now is getting through the second wave, and the winter, and most of what she called the “growth plan” will be rolled out in the spring.
You’d think there could be some economic benefits of putting some of the money to work sooner, or at least revealing where it is going, since it takes time to start up government programs. But the Liberal government wanted to convey the message that it is focused on the pandemic now. And, politically, that gives them a big thing to unveil in the spring.
There was another subtext to Ms. Freeland’s presentation: Don’t think too much about where the numbers are going.
Distracting from that would be quite a trick, given that even before the planned stimulus Ms. Freeland was projecting a deficit for the current 2020-21 fiscal year of $381-billion, assuming the pandemic doesn’t get worse.
As luck would have it, the unpredictability of the economy and imprecision about the stimulus plans make it difficult – nay, even foolhardy – to predict, according to Finance Canada, so four different scenarios were presented. Since all four have next year’s projected deficit no lower than $156.7-billion and the 2022-23 deficit ranging from $89.6-billion to $109.6-billion, maybe the details aren’t so important.
At any other time, you would expect the Conservatives to take aim at the debt pileup, and on Monday leader Erin O’Toole accused the Liberals of burning money. But the Tories are trying to walk a line: They want to attack big deficits, but don’t want voters to think they would have skimped on pandemic supports such as the Canada Emergency Response Benefit.
You can already imagine Mr. Trudeau daring Mr. O’Toole to say Conservatives would spend less, and do too little to get the economy rolling again. Mr. O’Toole will know he’s going to have to present his own version of an economic growth plan. The big political question of coming years is what comes after this pandemic, and it is now hard to imagine getting through 2021 without an election turning on that – and on Ms. Freeland’s stimulus plan.
Finance Minister Chrystia Freeland says the Liberals plan a stimulus program of up to $100-billion once the COVID-19 pandemic is on the run, but until then attacking the virus and helping those who need support is their top priority.
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