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Prime Minister Justin Trudeau and a handful of key cabinet ministers announced the \u201ccomprehensive\u201d coronavirus response package.<\/em><\/strong><\/p>\n The Niagara Independent, March 20, 2020 – <\/em>Canadians had been hearing for days from their political leaders, \u201cwe have your back,\u201d \u201cwe\u2019re all in this together,\u201d and \u201cnobody will be left behind.\u201d Then on Wednesday the federal government stepped forward to announce a support bundle of $82 billion to ease the angst Canadians are now beginning to experience as a result of the global coronavirus pandemic.<\/p>\n Finance Minister Bill Morneau offered up a sweeping $27 billion aid package to support families and businesses from economic fallout of the spread of the coronavirus. In addition, Morneau provided $55 billion in tax deferrals and low-interest loans designed to lessen the shock of the plummeting stock market and to stabilize a wobbly economy.<\/p>\n It is a sweeping relief package to weave together a safety net that will catch all those middle-class Canadians (one in three) who are living paycheque to paycheque, those worrying about their future in a gig-economy, and low-wage earners who can in no way afford to be without a job. The government\u2019s support will help Canadians pay for rent and groceries, and businesses continue to meet payroll and pay their bills. Ultimately, the support package is to carry the Canadian economy over an indeterminate period of time as our country slumps into an anticipated recession.<\/p>\n From new EI measures, to boosting child benefits payments, to new GST credits, to a host of tax measures, the federal government stepped up. Prime Minister\u00a0Justin Trudeau\u00a0provided comforting reassurance to Canadians that they need not worry about protecting their health and the health of their loved ones for the fear of not being able to feed their families or pay their rent or mortgages. PM Trudeau stated, \u201cIn these extraordinary times our government is taking extraordinary measures. Public health should never hinge on financial considerations.\u201d<\/p>\n Immediately financial analysts and political commentators began parsing the package to translate what this might mean for individuals and the business community. Some criticized that, given the mechanics of government programming, real dollars to those in need could not possibly start flowing until May. But Finance Minister Morneau assured Canadians who are worrying about money to pay necessities that they can expect emergency funds in two to three weeks.<\/p>\n Dan Kelly, president of the Canadian Federation of Independent Businesses, was critical of the 10 per cent wage subsidy rate offered to business owners to retain their workforce. CFIB is pressing government to provide a wage subsidy of 75 and 90 per cent, but Ottawa\u2019s Parliamentary Budget Officer Yves Giroux exposes how costly this may be: \u201cIt\u2019s very, very expensive\u2014can you imagine the government of Canada paying 75 per cent of the salaries of all those people that were laid off?\u201d Giroux added the observation, \u201cI don\u2019t see anyway where you could keep all the people employed, preventing job losses, when you have restaurants, airlines and other firms shutting down\u2026 In a situation like the one we\u2019re in, ideally assistance should not only be targeted, but also temporary.\u201d<\/p>\n The knee-jerk criticisms aside, the federal government\u2019s announcement was greeted with praise. Ontario Premier Doug Ford applauded the package as \u201cimportant steps to help keep our economy and people strong.\u201d Kevin Page, president of the Institution of Fiscal Studies and Democracy at the University of Ottawa, said the government deserves kudos for moving so quickly. National Post columnist John Ivison also gave thumbs-up: \u201cOttawa\u2019s commitment to \u2018do what it takes\u2019 is exactly the right message for Canadians.\u201d<\/p>\n Ivison was bullish on the reasoned approach taken by the Finance Minister who focused on putting food on tables and keeping roofs over heads, quoting Morneau, \u201cClearly the impacts of this pandemic have been profound and will continue to be profound\u2026 Our government is prepared to do whatever it takes to keep our economy strong and stable. Whatever it takes.\u201d<\/p>\n What is disconcerting though is not knowing exactly what it will take. A closed Canada-U.S. border, grounded flights, closed restaurants, cancelled concerts and \u201ca new normal\u201d for social interactions; how bad will the pandemic and required shutdowns be for Canada\u2019s economy? How much can Canadians expect the government to spend on the safety net \u2013 and for how long?<\/p>\n Canada\u2019s Central Bank Governor Stephen Poloz said the package of individual initiatives are \u201celastic\u201d and \u201cdesigned to expand or not,\u201d depending on circumstances. Poloz identified that those individuals with the greatest employment risks are the five million who work in retail, culture\/recreation, accommodation\/food services and real estate sectors. Though neither the Finance Minister nor the Bank Governor would venture an estimate of how many Canadians would lose their jobs, U.S. Treasury Secretary Steven Mnuchin forecasted that unemployment in the States would likely grow to 20 per cent. This is sobering: one in five will be without work.<\/p>\n Neil Irwin wrote a thoughtful\u00a0NY Times<\/em>\u00a0piece in which he foresees the pandemic having a profound economic and social impact \u2014 and a much longer than expected hang-over. Irwin argues that the health of the five sectors that have been shut down (air transportation; performing arts and sports; gambling and recreation; hotels and other lodging; and restaurants and bars) are critical for a robust American economy. The sectors accounted for 13.8 million full-time jobs and $574 billion in total employee compensation in 2018. Compromised is the $11 billion a week the affected American businesses normally pay their employees, not to mention all their payments for rent, debt service and property taxes. Irwin concludes, \u201cthe economy can\u2019t adjust on a dime, and the fact that doctors, nurses and grocery store clerks may end up working longer hours won\u2019t make up for millions of waiters, flight attendants and hotel housekeepers who are likely to see their incomes plunge.\u201d<\/p>\n John Robson of the\u00a0Ottawa Citizen<\/em>\u00a0echoes this insight when commenting on the limitations of government support: \u201cYou can\u2019t \u2018stimulate\u2019 your way out of a pandemic-driven recession.\u201d \u00a0Robson writes: \u201cWith the COVID-19 pandemic, everyone\u2019s telling governments to \u201cstimulate\u201d something called \u201cthe economy\u201d through deficits and interest rate cuts so we won\u2019t have less wealth just because people can\u2019t go to work and create it\u2026. here\u2019s the stinger: unless government multiplies loaves and fishes or cures the sick, it cannot \u201cstimulate\u201d the \u201ceconomy\u201d in a pandemic.\u201d<\/p>\n Unquestionably, there should be kudos to the federal government for its $87 billion relief package announcement this week. It is reassuring and provides Canadians with the support required to focus on what matters most.\u00a0So, stay healthy and safe all.<\/em>\u00a0The multiple questions regarding the country\u2019s economy and our future prospects can wait for another day.<\/p>\n Chris George<\/em><\/strong>\u00a0is an Ottawa-based government affairs advisor and wordsmith, president of\u00a0CG&A COMMUNICATIONS<\/a>. Contact:\u00a0ChrisG.George@gmail.com<\/a><\/em><\/p>\n