Finance Minister Chrystia Freeland said returning Canada to prepandemic levels of employment is a key target as the government works out the details of a recovery plan worth up to $100-billion over three years.
Ms. Freeland appeared Tuesday before the House of Commons finance committee, a week after delivering her first fiscal and economic update as Finance Minister.
The minister pointed out that while 80 per cent of the jobs lost during the pandemic have since been recovered, there are still more than 600,000 jobs that have not yet returned.
“The government will continue to work for [Canadians], to ensure that each Canadian who had a job before the pandemic will have one after. And that’s why we have a growth plan of between $70-billion and $100-billion,” she said. “We are committed to doing our job until Canadians have their jobs back.”
Last week’s update revealed that the federal deficit projection for this year has climbed to $381.6-billion, up from the $343.2-billion forecast in early July. The update also said the deficit could be nearly $400-billion if the pandemic worsens.
The update budgeted up to $100-billion over three years for future stimulus measures to boost the economy once the COVID-19 crisis eases.
The minister has not released a fiscal anchor, which is a term that describes a target for managing the deficit and debt. The update promised that such targets would be announced later and said fiscal “guardrails” would be used in the interim.
“It’s important for us to appreciate that we are working in an environment with a great deal of uncertainty. And that’s why, when we announced our intention to put in place a growth plan, we were very clear that we would be guided by fiscal guardrails, and those would be employment, unemployment and hours worked,” Ms. Freeland said.
On Tuesday, Fitch Ratings released a statement warning that Canada’s fiscal approach “could renew rating pressure.”
Fitch has been a negative outlier among rating agencies. It downgraded Canada’s triple-A credit rating to double-A-plus in June. Since then, other major rating agencies have confirmed their triple-A ratings for Canada.
Even though Fitch highlighted Canada’s rising debt levels Tuesday, it also said the emergency spending has supported the economy.
“Canada’s extraordinary fiscal and monetary policy supports have effectively buttressed the national economy through pandemic restrictions and should help bolster the recovery further in 2021,” Fitch said. “Strong residential investment and export recovery trends also support our expectation for a less severe recession in 2020.”
During Tuesday’s committee meeting, Conservative and NDP MPs criticized the government for not providing more detail about how the government has spent hundreds of billions of dollars during the pandemic.
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