Organizations offer contrasting responses to recovery measures outlined by federal government
In its historic Throne Speech, Canada’s federal government outlined a bold, ambitious strategy to lead the country on the path to economic recovery. While no one can argue with the objective, two think tanks evidently have different takeaways from the pronouncements.
In a statement, the Chartered Professional Accountants of Canada (CPA Canada) applauded the government for its proposed staged approach to economic recovery, with an initial focus on immediate short-term concerns followed by broader attention on economic renewal.
“It is essential that the urgent needs of all Canadians and the business community be addressed as collectively we adjust to new realities during an anxious and unpredictable time," said CPA Canada President and CEO Charles-Antoine St-Jean.
He called proposed changes to the Employment Insurance regime “encouraging,” noting how they aim to make the program better aligned with the changing nature of work. He was similarly welcoming of the federal government’s expressed commitment to address childcare “to support more women returning to work as part of the economic recovery.”
With respect to the government’s long-term focus, CPA Canada reiterated a call from its pre-budget submission to pursue a path toward “a low-emissions, climate-smart economy” that also considers challenges faced by key sectors and regions. The organization also called for efforts to build trust in the digital economy and ensure sound data governance.
“The federal government needs to adopt a fiscal anchor or rule along with detailed economic and fiscal projections,” St. Jean added, highlighting the need to reassure businesses and investors.
The Montreal Economic Institute (MEI) was much more adamant on that point. According to Miguel Ouellette, Economist at the MEI, the measures unveiled by the federal government do not represent a path toward a solid economic recovery following the severe, generalized lockdown of Canada’s economy over the past months.
“Unfortunately, far from signalling a return to normal, this throne speech instead confirms that the explosion of public spending will continue,” Ouelette said, commenting on the series of new programs that will add to the country’s already-ballooning debt.
He said that while much of the spending that the government has taken on was arguably unavoidable, the newly announced measures represent a “deliberate choice” that bets on a rapid comeback of the global economy, an indefinite protraction of low interest rates, and programs with “questionable” efficacy at stimulating growth.
The statement from MEI took aim at programs supporting the unemployed, suggesting that public funds spent for people to stay home should be replaced with measures that encourage companies to rehire employees. Subsidies for green-tech companies, according to Ouelette, have been shown to be costly and risky based on the experience of Ontario and various other countries and regions around the world.
“Especially worrisome is the fact that the government is giving no concrete sign of any intention to return to budgetary balance,” he said. “The country already lived through this in the 1970s, and it took two decades to get public finances back under control. The fundamental laws of economics have not changed since then.”
