Morneau said to plan economic update as COVID-19 costs mount

The federal Liberal government is planning to release an economic update amid calls by opposition parties to address the ballooning cost to combat economic damage caused by COVID-19, BNN Bloomberg has learned. 

While the exact date is not known, a senior government source says finance department officials are targeting this summer for the planned update.

The decision to proceed has come together in recent days, based on conversations among cabinet members as well as members of the opposition, according to two people with knowledge of the talks.

Finance Minister Bill Morneau has begun preparing for the update, which would put the government’s spending in stark terms and highlight the risks associated with continued financial aid, said one source.

Prime Minister Justin Trudeau played down the idea of releasing a traditional update while speaking to reporters Tuesday.

“There are so many things that we simply don’t know, that making projections about what our economy could look like six months from now or a year from now would be an exercise in invention and imagination,” Trudeau said.

The summer target has not been formally announced and could be subject to change depending on how events unfold. A spokesperson for Morneau did not confirm or deny the planned update when reached for comment by BNN Bloomberg.

“The situation remains extremely dynamic which makes it difficult to provide accurate and precise projections. We will continue to monitor changes in our economy and be open and transparent about the actions we take to support Canadians through this crisis,” said Maéva Proteau in an email.

The prime minister has rolled out unprecedented fiscal measures to offset damage to Canada’s economy caused by the COVID-19 pandemic. To date, the government has committed more than $150 billion in direct coronavirus-related aid.

As that spending continues to climb, tensions have grown within the government over whether to release an update that would add a level of fiscal accountability, according to one source.

Those reluctant to release an economic update have privately raised concerns it could serve as a distraction, according to two people familiar with the matter, pointing to polling data that supports Trudeau’s spending announcements.

“Canadians’ overall satisfaction with government in Ottawa is near an all-time high,” veteran pollster Nik Nanos, chairman of Nanos Research Group, told BNN Bloomberg in a phone interview. “In addition, most Canadians expect we will need even more stimulus to ensure there is support for both businesses and individuals through the pandemic.”

“We will need to look very carefully at how we remain fiscally responsible as we move forward,” Trudeau told reporters Tuesday morning. “But the best thing to focus on is ensuring that Canadians can come back from this strongly.”

Parliamentary Budget Officer Yves Giroux recently estimated the deficit has surged to $260 billion and said it is “not unthinkable” that the federal debt could reach $1 trillion this fiscal year.

“It’s not rocket science: if we can have scientists working on a vaccine to combat COVID-19, I think we can at least give it a good college try to try estimate the deficit in the current fiscal year,” Giroux said in a BNN Bloomberg television interview on Tuesday.

Taking on the task of delivering a full budget in the middle of a pandemic would be challenging, since the government’s resources continue to be largely focused on the COVID-19 response.

However, an economic update could essentially serve as a mini-budget.

“I believe Canadians deserve to see at least an economic update,” outgoing Conservative Party of Canada Leader Andrew Scheer told BNN Bloomberg on June 1. “We are dealing with an unprecedented situation so I can understand the hesitancy for the Department of Finance to want to do a full-blown budget with all that accompanies that, but at least an economic update.”

Morneau has acknowledged the need for fiscal transparency, while also citing the challenge in dealing with the economy’s collapse.

“Obviously the overall economic situation is very fluid,” he said during a television interview with CTV’s Question Period on May 24. “As we have more information, we will come forward with an economic and fiscal update, as we should.”

As part of its preparation for an economic update, the Department of Finance has begun reviewing the government’s spending commitments tied to each of the emergency aid programs, according to sources.

In some cases, such as the Canada Emergency Response Benefit (CERB), program spending has exceeded expectations. 

To date, the government has paid out in excess of $43 billion in CERB benefits, which has gone beyond the government’s initial $35-billion budget.

As part of its preparation for an economic update, the Department of Finance has already begun reviewing the government’s spending commitments tied to each of the emergency aid programs, according to sources.

In some cases, such as the Canada Emergency Response Benefit (CERB), program spending has exceeded expectations. 

To date, the government has paid out in excess of $43 billion in CERB benefits, which has gone beyond the government’s initial $35-billion budget.

Comparatively, the uptake on programs such as the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Commercial Rent Assistance program (CECRA) has been lower than expected.

As BNN Bloomberg reported in May, Morneau is said to have also navigated questionable fiscal aid requests from some members of the Liberal caucus.

“Everyone wants money for what’s important to them but there isn’t infinite money to spend,” one senior government official told BNN Bloomberg in a story published May 15. “MPs tend to become fixated on what is important in their ridings versus the country.”

Morneau originally planned to deliver this year’s budget on March 30. That plan was unveiled in the House of Commons on March 11 — the same day the World Health Organization declared COVID-19 a global pandemic. By the end of that week, Parliament was suspended and the budget was off the table.

An economic update could also help transition the government from crisis to recovery mode. Various cabinet members have already proposed recovery task forces and the U.S. consulting firm Boston Consulting Group has provided pro bono work to Ottawa on the subject.

Meanwhile, pollster Nik Nanos said Canadians are likely to remain supportive of the government’s efforts while stimulus spending remains in full swing.

“The bills are still piling up,” Nanos said. “The tough part is when the final bill is tallied.”