Fiscal update will sketch out spending plans for post-pandemic recovery phase
The federal government is finalizing a fall fiscal update that will lay out how much it has spent to respond to the COVID-19 crisis, give the country a sense of what might be required for a post-pandemic recovery — and attempt to project how much fiscal firepower will be left over to deliver on big-ticket promises such as pharmacare.
There hasn’t been a federal budget since March of 2019 and multiple federal officials say this update won’t approach the level of detail seen in a budget. Instead, it will attempt to show what’s coming next, and to give Canadians a sense of the kind of stimulus spending the federal government plans to deploy to avoid a post-pandemic recession.
“We need to give Canadians hope of what a recovery plan will look like and how much (money) we have for that,” said a senior government official speaking on background. “You can’t recover during COVID, but you can have a post-COVID recovery.”
The government has said repeatedly there is no limit to what it’s willing to spend during the pandemic emergency phase, and has defended its record deficits.
“The risks of fiscal inaction outweigh the risks of fiscal action,” Finance Minister Chrystia Freeland recently told the Toronto Global Forum. “Doing too little is more dangerous, and potentially more costly, than doing too much.”
Short-term vs. long-term spending
As Freeland also signalled in that speech, the economic statement will attempt to set some limits on short- to medium-term stimulus spending while outlining what might be available for long-term structural spending on social programs such as child care and pharmacare.
Sources say federal stimulus spending will intersect with the Trudeau government’s environmental agenda and could focus on transit, housing and energy efficient retrofits. Funding for those measures could come in the form of one-time or multi-year packages, but would not necessarily amount to permanent annual spending increases.
That permanent funding space is being reserved for centrepiece commitments in the last throne speech to expand access to child care and make progress toward a national pharmacare program.
The senior government official said the fiscal update will offer a series of financial projections that show best- and worst-case scenarios for the recovery. The official said federal government confidence in those fiscal scenarios likely will dictate the scale of structural spending.
The fiscal update is expected only to outline those measures in broad terms, with more details to come in a spring budget.
Hanging over the planning for the fiscal update is the premiers’ demand for a first ministers meeting on health care transfers. The premiers want the federal government to increase annual health transfers by at least $28 billion per year, while also underwriting the bulk of the pandemic support programs upon which many workers and businesses rely.
Multiple government officials say efforts to finalize the fiscal update are moving slowly because the country is still navigating the pandemic’s second wave. COVID-19 caseload numbers change regularly and different parts of the country are in different stages of lockdown.
The original target for the update was the final week of November, but sources concede that could slide to the first week of December.