On Wednesday, September 23rd, 2020, the Governor General of Canada, Julie Payette, addressed Canadians with her Speech from the Throne to open the Second Session of the Forty-Third Parliament of Canada. Her speech was grounded by four distinct foundations that are thought of as instrumental to Canada’s approach to recovering from the unwavering COVID-19 pandemic. They are, in her words: 1) to fight the pandemic and save lives; 2) supporting people and businesses through this crisis; 3) to build back better to create a stronger, more resilient Canada; and 4) to stand up for who we are as Canadians.
The following analysis focuses on the fiscal objectives interspersed throughout the Governor General’s speech, which are primarily located within the design of foundations 2 and 3.
Helping Canadians through the pandemic
The Government declared that, “[t]his is not the time for austerity”. It was noted that the economic impact of the COVID-19 pandemic in Canada has already exceeded the 2008 financial crisis, but the Government believes that the way forward is through government spending. They justify this increased spending with low interest rates and the suggestion that government can more easily take on debt than individual Canadians.
Highlighting this approach, the Government referred to details of the usage of two existing programs:
- The Canada Emergency Response Benefit (CERB) was used by 9 million Canadians; and
- The Canada Emergency Wage Subsidy (CEWS) was used to support over 3.5 million jobs.
The Government plans to extend CEWS until summer 2021 and to continue supporting Canadians with these and similar programs. They have promised to create 1 million jobs by directly investing into the social sector, infrastructure, job training, and incentives for employers to hire and retain workers. Additionally, the “Youth Employment and Skills Strategy” will be scaled up to provide more paid work experiences for youth.
The Throne Speech also addressed previous Government spending, which included:
- A $19 billion “Safe Restart Agreement” with the provinces and territories intended to support healthcare and to secure personal protective equipment;
- A $2 billion “Safe Return to Class Fund” to help schools with cleaning and ventilation; and
- New funding for First Nations communities.
Support for worker and families
The Government will create a transitional Canada Response Benefit to help Canadians transition from the CERB to the Employment Insurance system, which will be revamped to include self-employed individuals and those in the gig economy.
The Government acknowledged that women, particularly low-income women, have been the hardest hit by COVID-19 during this “she-cession”. The Government will work to help more women get back into the workforce by making childcare more accessible by subsidizing before and afterschool program costs.
Support for businesses
The Government will take the following steps to support struggling businesses:
- Extending the CEWS into the summer of 2021;
- Expanding the Canada Emergency Business Account (CEBA) to help businesses with fixed costs;
- Improving the Business Credit Availability Program; and
- Introducing support for industries that have been hit the hardest, including travel and tourism, hospitality, and cultural industries like performing arts.
The Government indicated that it will “do whatever it takes” and use “whatever fiscal firepower” to support people and businesses in the short term. The Government will focus on strengthening the middle class and look for ways to “tax extreme wealth”, including limiting the stock option deduction for wealthy individuals and large, established corporations. The Government also plans to address corporate tax avoidance by “digital giants” and ensure that their revenues are shared with creators and media.
This fall, the Government will release an update to its COVID-19 Emergency Response Plan, which will outline the Government’s economic and fiscal position, provide fiscal projections and set out new measures to implement the Throne Speech.
Building back better
Addressing gaps in our social systems
The COVID-19 pandemic has also had the effect of exposing significant weaknesses in our health care system. Below are the social systems for which the Government has pledged their support, and some action items for each going forward:
- Support for seniors:
- An increase to the Old Age Security once a senior turns 75, and a boost to the Canada Pension Plan survivor’s benefit; and
- Further targeted measures for personal support workers helping vulnerable communities.
- Support for the disabled:
- A new Canadian Disability Benefit modelled after the Guaranteed Income Supplement for seniors;
- A “robust” employment strategy; and
- A better process to determine eligibility for disability programs and benefits.
- Support for the health care system:
- Ensure that everyone has access to a family doctor or primary care team;
- Increase the flexibility of systems to reach people at home (i.e., virtually);
- Address the opioid epidemic and increase access to mental health resources; and
- Accelerate the development of a universal pharmacare program.
- Support for communities:
- Accelerate investments in women’s shelters and transitional housing;
- Invest in all types of infrastructure, including public transit, energy efficient retrofits, clean energy, rural and universal broadband and affordable housing; and
- Support regional routes for airlines.
The Government also pledged to make substantial investments in housing for all Canadians. They announced their intention to eliminate chronic homelessness following the recent investment of over $1 billion, by adding to the National Housing Strategy announced in 2017 by increasing investment in rapid housing in the short-term, and partnering with not-for-profits and co-ops in the mid- to long-term. For the middle class, the Government also pledged to move forward with enhancements to the First-Time Home Buyer Incentive.
Further, the Government intends to continue to work with partners to address food insecurity. The highlights of that plan are to strengthen local food supply chains, support and protect producers, harvesters and processers, and ensure that those in Canada’s supply managed sectors receive fair compensation from trade agreements.
A stronger workforce
The COVID-19 pandemic revealed inequalities Canadians face in the workforce. Working with the provinces and territories, the Government intends to make the largest investment in Canadian history in training for workers. This will be accomplished by:
- Supporting Canadians as they build new skills in growing sectors;
- Helping workers receive education and accreditation; and
- Strengthening workers’ future, by connecting them to employers and good jobs, in order to grow and strengthen the middle class.
The Government also intends to make generational investments in updating outdated IT systems to modernize the way that the Government serves Canadians; this includes working to introduce free, automatic tax filing for simple returns to ensure Canadians receive the benefits they need.
Taking action on extreme risks from climate change
Climate action will be a cornerstone of the Governments plan to support and create million jobs across Canada. As part of this plan, the Government will:
- Create thousands of jobs retrofitting homes and buildings, cutting energy costs for Canadian families and businesses;
- Invest in reducing the impact of climate-related disasters to make communities safer and more resilient;
- Help drive more transit and active transit options;
- Make zero-emissions vehicles more affordable while investing in more charging stations across the country;
- Transform how we power our economy and communities by moving forward with the Clean Power Fund;
- Support investments in renewable energy and next-generation clean energy and technology solutions;
- Support manufacturing, natural resource, and energy sectors as they work to transform to meet a net zero future; and
- Recognize farmers, fishers, foresters, and ranchers as key partners in fight against climate change, supporting their efforts to reduce emissions and build resilience.
The Government stated Canada building zero-emissions vehicles and batteries as an example of moving to a carbon-neutral future, with Canadian natural resources and Canadian expertise as Canada’s competitive edge in this area. To attract investment in making zero-emissions products the Government intends to cut the corporate tax rate in half for these corporations to create jobs and make Canada a world leader in clean technology. Further, the Government intends to continue its policy of putting a price on pollution.
Yesterday’s Throne Speech reflects a significant shift in Government policy as it looks to manage the effect of the COVID-19 pandemic and the role that Canada will play in a world that has likely changed forever. This commentary focused on fiscal policy – but several non-fiscal policy matters were also addressed.
Read the full copy of the Throne Speech.