Canadians need a 'strategy for fiscal responsibility': Canadian Chamber of Commerce CEO
The federal government unveiled a four-pillar plan in this week’s Speech from the Throne meant to help Canada’s economy navigate – and ultimately survive – COVID-19.
But many of the proposals lack details at a crucial time in the pandemic when cases across the country are on the rise. With this in mind, some experts say all layers of government will need to take a different approach than they did in the spring to assist individuals and businesses if a full-blow second wave engulfs the country.
“Our understanding of the risks has evolved considerably and I think governments can be more sophisticated in their response. Rather than requiring a blanket shutdown of non-essential economic activity, governments can certainly take a more targeted approach,” Ambarish Chandra, associate professor of economic analysis and policy at the University of Toronto, told BNN Bloomberg in an email.
In the throne speech Wednesday, Prime Minister Justin Trudeau's government vowed to do “whatever it takes” to keep the country’s economy afloat through the pandemic. Some of the initiatives outlined in the speech include extending the Canada Emergency Wage Subsidy, a commitment for nation-wide child care, and a desire to tax the rich.
Avery Shenfeld, chief economist of CIBC Capital Markets, wouldn’t comment on whether the throne speech proposals would be enough, given the lack of details. But he echoed Chandra’s sentiment, noting that because we have a better understanding of how the virus spreads, restrictions can be imposed in narrower geographic regions rather than province-wide.
“Epidemiologists have now downplayed the role played by touching objects, so we can relax a bit about sanitizing physical spaces; we know that masks and ventilation significantly reduce infections in short-term contact situations, so we don’t need to shut down clothing stores or shopping malls,” he said in an email.
Still, Chandra said the federal government will need to continue to provide assistance to workers if some businesses are forced to shut down again. On Thursday, the government announced a plan to sweeten the proposed Canada Recovery Benefit to $500, up from the previously-announced $400 per week, once the Canada Emergency Response Benefit (CERB) ends Sept. 27.
“The question of continued support to businesses is more tricky,” Chandra said. “My personal view is that certain high-risk businesses should just be paid to remain closed when case numbers are particularly high in those regions. But governments cannot keep paying out indefinitely, so here too there needs to be some kind of priority list for the kinds of businesses that we would not want to go under if they can just survive the next few months.”
According to Laura Jones, executive vice-president and chief strategic officer of the Canadian Federation of Independent Business (CFIB), there are two important things governments can do to ensure businesses don’t suffer during a second wave the same way they did in the first.
“Politicians can promote the importance of local shopping and instill confidence in consumers about what is safe …the recovery depends on consumer confidence,” she said in an email.
“The second important thing is ensuring that government supports, including rent relief, are in place. This includes extra support for businesses that may need to remain shut or be shut down again.”
She added clear communication and keeping programs as simple as possible should be a priority for governments.
As for what businesses can do to prepare for a second wave, Jones said it’s important to have a hard look at cash flow and do some scenario planning.
“To keep sales coming in, it may be helpful to think about what worked and what didn’t in the first wave,” she said.