Shifting From COVID-19 Response to Recovery

In the 100 days since COVID-19 was declared a global pandemic, governments across Canada were quick to act, adjusting the activities of legislatures. In the early stages, unprecedented levels of cooperation – across both aisles and jurisdictions – defined the emergency response. But as the pandemic has persisted, it has revealed fractures and weaknesses in both the health care system and in the economy, revealing challenges for governments to address as the focus shifts from COVID response to recovery.

With the House of Commons Special Committee on COVID-19 ending this week, the spirit of collaboration and consensus that defined the initial COVID response on Parliament Hill is fading. The partisan divisions more common in a minority Parliament are coming to the fore in negotiations on the government’s COVID-19 response, and external events – including the anti-racism movement and increasing tensions in the relationship with China – are coming into greater focus. In addition, the focus on the number of actual House of Commons sittings, instead of the virtual meetings of the Special Committee on COVID-19, have been very much a part of the debate on how a Parliament should function in a crisis.

On Wednesday, the House of Commons passed the supplementary estimates, and, as we predicted, the NDP joined the Liberals to provide the government with the votes required to pass the latest COVID-19 response measures. Also, notably, federal NDP Leader Jagmeet Singh tried to receive unanimous consent for a motion on anti-racism. This motion was rejected by Bloc House Leader Alain Therrien and Singh denounced Therrien as a “raciste” as he was evicted from the Commons.

Unusually, there will be four sittings of the House of Commons over the summer. These will be opportunities for the Liberal government to advance the legislation necessary to respond to the pandemic, including the legislation it introduced last week proposing changes to the Canada Emergency Response Benefit and authorizing an emergency payment to Canadians with disabilities. However, as this week’s sitting demonstrated, maintaining focus on the pandemic will become more and more challenging as movement restrictions are lifted and political discourse continues to broaden.

Preparing for Economic Recovery

COVID-19 may have begun as a public health crisis, but its legacy may be an economic one. At the federal level, the Liberal government will provide an economic and fiscal “snapshot” to the House of Commons on July 8. This snapshot is likely to be more about the numbers and less about policy initiatives.  It will provide an economic update and forecast what can be expected over the next few months. However, it will not include longer-term projections, given the economic uncertainty of the pandemic.

Across the country, the pandemic has wreaked havoc on both provincial and municipal spending and revenues, but it will take time to understand the full impact.

In Quebec, Finance Minister Eric Girard is projecting a $15-billion deficit for the year, after forecasting a nearly $3 billion surplus before the pandemic. Revenues have fallen by $8.5 billion since March, while billions in additional spending have been announced to support the health sector, support workers and companies.

Other provinces, such as Ontario, have not yet released budgets this year, but are expected to provide some sort of fiscal update on the state of their finances.

Recovery remains top of mind for all levels of government, but especially at the federal level, where the major pillars of the COVID-19 response – the Canada Emergency Response Benefit and wage subsidies – have both been extended through the summer months. Enabling a greater transition for Canadians from the CERB back to work is a pressing immediate concern, but may also indicate deeper, more systemic challenges in the workforce and the economy.

Cracks are beginning to show between federal-provincial relations too, with some provinces such as Ontario and Quebec indicating that the federal government’s $14 billion targeted spending to help provincial and municipal governments falls well short of what’s needed.

Looking ahead, the Standing Committee of Finance has initiated its consultations on Budget 2021, seeking input on how the federal government can restart the economy as it recovers from COVID-19. At the F/P/T table, discussions continue between First Ministers on how the federal government can support recovery in the provinces, recognizing regional differences in recovering from the pandemic.

Reopening and Resuming: What Comes Next?

Until there is a vaccine for COVID-19 available to the public or some sort of proven “herd” immunity, economic health will depend on ensuring public health measures manage and decrease infections. As economies gradually reopen across the country, the federal government has announced the launch of a nation-wide mobile app to provide notifications of exposure to COVID-19. The product of collaboration between the Canadian Digital Service, the Ontario Digital Service, Shopify, and BlackBerry, the app provides an additional tool to support public health case contact tracing. Downloading the app, however, will be voluntary. Ontario will begin testing the app as soon as July 2, with eventual roll out to other provinces and territories.

Enhancing contact tracing is only one aspect of supporting the reopening of the economy. As economic activity resumes and people return to workplaces, supports are needed to enable safe economic recovery – including the resumption of child care services and the return of school in the fall. In Ontario, different scenarios are being contemplated for resuming school in September, taking into consideration school day routines, whether class sizes can be modified to a cohort of 15 students, and at-home learning.

Normally, political life slows down during the summer. However, 2020 is anything but normal. The coming months may provide an opportunity to re-imagine how governments can support the economy and support resiliency in the face of any subsequent waves of COVID-19. But with waning political cooperation and increasing partisanship at the federal level, a key challenge for the governing Liberals will be to ensure support within so the government is not defeated on a spending measure. F/P/T relations are also being monitored closely to see if the cooperation and camaraderie observed at the beginning of the pandemic can be sustained.