Question Period Note: FISCAL PRUDENCE

Opposition parties, stakeholders and a part of the Canadian population are concerned with a growing deficit brought by emergency measures introduced by the Government in response to COVID-19.

• The Government of Canada is committed to responsibly manage resources in an open and transparent manner.
• The Government has taken immediate and decisive action to help keep Canadians employed and support businesses through this challenging time.
• By acting quickly and extensively, Canada avoided a deeper, more prolonged and costly downturn, which would have had detrimental impacts not only on the jobs and incomes of individual Canadians, but also on their level of debt.
• Canada continues to be among the most highly rated G7 countries and its strong credit rating is also contributing to a low cost of borrowing.
• The government’s commitment to maintaining this advantage will help ensure future generations are not burdened with COVID-19 related debt.

Through Canada’s COVID-19 Economic Response Plan (the Plan), the government has taken strong, immediate, and effective action to protect Canadians from the impacts of the pandemic.
Through the Plan, the government has committed:
• Over $212 billion in direct support to Canadians and businesses;
• $85 billion in tax and customs duty payment deferrals to meet liquidity needs of businesses and households;
• $5.8 billion in support for coordinated federal, provincial and territorial action to strengthen critical health care systems, purchase personal protective equipment and supplies and support critical medical research and vaccine developments; and,
• Approximately $14 billion to support provinces and territories in the safe reopening of the country’s economies over the next 6 – 8 months.
The government has also made $600 billion in liquidity support accessible to help ensure that businesses could continue to access credit and to promote well-functioning provincial funding markets.
The measures introduced in the Plan, combined with over $65.6 billion in direct support and liquidity measures from provinces and territories, will ensure that the Canadian economy is well-positioned to recover when the crisis subsides.
Canada entered the crisis with a strong balance sheet, the lowest net debt-to-GDP ratio in the G7, and historically low borrowing rates, giving the government the ability to respond to the immediate needs of Canadians with decisive action and protect the Canadian economy from the unprecedented nature of the COVID-19 pandemic.
The first priority of the Plan is to protect the health and safety of Canadians by supporting efforts to contain the virus and help Canada’s public health and health care systems prepare for the pandemic.
According to a recent (September 22, 2020) Ipsos poll conducted for Global News, 55 per cent said the deficit is too big – an increase of 12 points from May 2020; and 78 per cent say they want to see a plan to return to balanced budgets.

The Government’s July economic and fiscal snapshot noted that:

• Private economists expect an annualized decline of over 40 per cent in Canada’s real GDP in the second quarter of this year.
• They also expect the economy to contract by 6.8 per cent in 2020 as a whole, its sharpest drop since the Great Depression, before rebounding by 5.5 per cent in 2021.
• The shape of Canada’s economic recovery is uncertain and highly dependent on public health.
• The Government’s economic response plan prevented the contraction in real GDP to reach over 10 per cent in 2020 and the unemployment rate to rise by a further 2 percentage points.
• The temporary measures have a significant impact on the federal deficit. Coupled with the severe deterioration in the economic outlook, these result in a projected deficit of $343.2 billion in 2020-21.
• The Government’s response is in line with the fiscal response deployed by other comparator countries.
• Canada is expected to maintain its low debt advantage among G7 countries.
• The government’s commitment to maintaining this advantage will help ensure that future generations are not burdened with COVID-19 related debt. La ministre des Finances a également été citée dans le National Post : “Let me assure Canadians that we understand the value of wise and prudent fiscal management and that is a policy our government will continue.” “We need growth and we need jobs,” she said. “We know those Canadians want to work and our government is absolutely committed to working hard to get the economic growth that is required for all Canadians to have jobs.”