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Encouraging comments but limited action in Fall Economic Statement

Ottawa (01 Dec. 2020) — Rightfully, much of the focus of yesterday’s Fall Economic Statement was on the COVID-19 pandemic. There were some additional funds for the public health response, including PPE and vaccines, and more measures to support workers, families, businesses, and communities that are impacted by the lockdowns.

As with the Speech from the Throne, there were a few encouraging commitments, but they were somewhat lacking in substance. Canadians expected that this fiscal update would deliver more detail on the progressive-sounding vision outlined in the throne speech. For example, Minister Freeland reiterated the government’s commitments to addressing structural issues like homelessness and systemic racism, but offered few insights on how the government will accomplish these things. Tackling these issues requires serious action and resources, not merely statements of intent.

Minister Freeland was clear: the government aims to provide substantial supports to get people through the pandemic and resulting recession, but they will be temporary supports and measures. This raises concern about this government’s long-term commitment on several fronts: paid sick leave for all workers, a pathway to residency for migrant workers, a living wage for essential workers, the right to housing, and fixing the long-term care system. Will these commitments fall by the wayside once the worst of the pandemic has passed?

Small step forward on long-term care

What is needed from the federal government to protect people living in long-term care facilities is for long-term care to be brought under the Canada Health Act. This would help address the problems caused by for-profit long-term care and establish the responsibility of the federal government to help fund long-term care. 

What was announced came nowhere close to that.

The newly announced Safe Long-term Care Fund will provide $500 million a year for two years. This is a step forward, but the amount is a fraction of what the federal government would pay if it were paying the same share of the cost of long-term care as it does for services  covered under the Canada Health Act. It also fails to address the problem of private for-profit owners putting returns for investors ahead of the safety of residents and staff.

Similarly, the plan to work with the provinces to set standards that would do things like “raising the working conditions of lower-wage essential workers in senior care” is encouraging, but as long as for-profit care is still allowed there will be pressure to cut corners to increase investor profits and executive salaries.

Nothing new on pharmacare

The COVID-19 pandemic showed just how much pharmacare is needed, as millions of workers lost their drug coverage when they lost their jobs. Unfortunately, the only mention of pharmacare in the Fall Economic Statement was a rehash of previous announcements. 

Funding for child care secretariat, but nothing new on national child care system

Minister Freeland acknowledged that the pandemic has disproportionately impacted women, undoing years of progress in women’s labour force participation, and that universal access to child care would have a positive impact. It is also positive that the economic statement recognized the workforce issues within the undervalued sector, predominantly made up of women workers, and committed funds towards recruitment and retention.

The government has committed to funding over 5 years towards laying the groundwork for a national child care system, including establishing a child care secretariat — a commitment previously made during the 2019 election. Unfortunately, this will still push the reality of a national system further into the future when it is already long overdue. And rather than making investments in the child care system now to address issues of access and affordability, the government will instead be temporarily boosting the Canada Child Benefit.

More action, supports needed to address violence

It was encouraging to see that the federal government recognizes the ongoing pandemic of gender-based violence (GBV). NUPGE has been sounding the alarm on the increased risk of domestic violence during the COVID-19 pandemic. 

In the economic statement, the federal government committed to address GBV and committed funds to addressing the systemic violence against Indigenous women, girls, and Two Spirit people. This is an essential, and long overdue, step forward, but more action is needed. The statement references Call for Justice of the National Inquiry into Missing and Murdered Indigenous Women and Girls, but stops short of committing to implement them. 

Furthermore, there were no new commitments to address domestic violence, which is set to be only further exacerbated during the second wave of COVID-19.

Some progress on climate action

Freeland suggested the recovery will be a green one. The initiatives and investments outlined yesterday include energy retrofits, building zero-emissions vehicle charging stations, and planting trees. The federal government will need an ambitious climate action plan to reach its goal of net-zero emissions by 2050, outlined in the recently proposed climate accountability legislation.

Absent from the economic statement were details on a Just Transition for the workers and communities that will be hardest hit by the impacts of climate change and energy transition.

Wage subsidy and other business supports increased

Supports to business were increased, with the subsidy rate businesses can receive under the Canada Emergency Wage Subsidy going up to 75% (CEWS). What the figures for COVID-19 spending also make clear is that more is being spent on supports to business than on programs like Employment Insurance (EI) or the Canada Emergency Response Benefit (CERB).

Temporary changes to EI and newly introduced temporary income support were not changed. These have helped fix many of the problems with the EI system, and it is hoped that the federal government will honour its commitment to reform the EI system to correct the problems that existed.

Several steps forward and one step back on tax fairness

The federal government is finally taking steps to require that foreign-based businesses operating in the digital economy pay the same taxes as businesses based in Canada. Starting on July 1, 2021, foreign-based businesses operating online will be required to pay the GST/HST on their sales in Canada. That will end the current unfair situation where businesses based in Canada were collecting a tax while the foreign-based competitors were not. 

There is a commitment to further level the playing field by taxing foreign-based digital companies providing services in Canada. This measure is supposed to be announced in the 2021 federal budget. If the government follows through on that plan, it would end the current unfair situation where businesses like Amazon make massive profits in Canada, but pay almost nothing in taxes.

However, there was no mention of many important tax fairness measures the federal government could be taking, including a wealth tax. As well, the proposals for the stock option tax deduction mean that the original plan to close this expensive loophole has been effectively gutted.