Early this week the Prime Minister announced that new policy measures to address the COVID-19 virus would be released on Wednesday. Expectations were high that he would respond with a substantial package of policy initiatives to support Canadians and the economy.

But this didn’t happen. Instead he announced a $1 billion package (.05% of GDP) of policies that was sorely inadequate. This was a trivial amount and it will do little to create confidence that the government really understands the seriousness of the health and economic situation of the country, especially since shortly after the Prime Minister’s press conference, the World Health Organization declared COVID-19 a pandemic.
Of the $1 billion, about $100 million to $600 million relates to expenses already occurred or will be before the end of the 2019-20 fiscal year. A total of $500 million is provided to provinces and territories for “critical health care system needs preparedness and mitigation efforts”. All of this could be “booked” in 2019-20 as part of year-end expenses. An additional $275 million is being provided to enhance research capacity on vaccine and antiviral development and clinical trials. The changes to employment insurance (EI) benefits for sickness and work sharing amount to $17 million. Most of the $1 billion can be booked in the 2019-20 fiscal year.
But is this enough? Absolutely not and the Prime Minister knows it.
The Prime Minister has promised additional measures in the March 30 budget but why wait? The Finance Minister could have delivered the budget his week. What will the finance minister know about the virus in three weeks that he doesn’t already know today?
He knows the growth outlook is much worse.
In the December 2019 Economic and Fiscal Update, real economic growth was forecast at 1.6% in 2020. Economists are now busy revising down their forecasts. Some are now forecasting growth for this year of only 0.5%.
Mr. Morneau should not make the same mistake that Minister Flaherty did in 2008 and 2009.
In the February 2008 Budget, real economic growth for 2009 was forecast at 2.4%.  This was revised down to a negative 0.8% in the 2009 Budget and to a negative 2.5% in the 2010 Budget.
A surplus of $1.3 billion for 2009-10 was forecast in the 2008 Budget.  This was revised to a deficit of $33.7 billion in the 2009 Budget and to $53.8 billion in the 2010 Budget.  The final audited outcome for 2009-10 was $56.4 billion.
Will Mr. Morneau make the same mistake?
In the 2008 financial crisis, the Harper Government implemented stimulus measures totalling $18 billion in 2009-10. Changes to EI benefits totalled $1.5 billion in 2009-10. The changes announced today amount to only $17 million.  
A package of at least $10-20 billion is required in the current health and economic situation. The budget should focus entirely on assisting the health of Canadians and mitigating economic fallout.
It is in times like this that a government must show a capacity to act decisively.

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