Supporting a Safe Restart: A Long Road Ahead

Prime Minister Justin Trudeau announced today that the federal government is offering $14 billion to the provinces and territories as part of a safe restart agreement. The offer is a federal contribution to support the safe re-opening of the Canadian economy over the next six to eight months. The plan is intended to help provide personal protective equipment, access to childcare, assistance to the most vulnerable, up to 10 days of sick pay, and support to cities and municipalities for public transit and community programs. It will also include specific standards that must be met in order to qualify.

The Prime Minister acknowledged that the plan requires some flexibility to accommodate the different realities faced by each province and territory. He emphasized that the plan would provide a standard of support to keep every Canadian safe and healthy as the economy restarts.

Ontario Premier Doug Ford was quick to respond to the federal government’s offer, noting that $14 billion shared by the provinces must be the start of a conversation, not a solution. Ford contended that Ontario alone is facing an estimated $23 billion cost to deal with the impacts of COVID-19, including health care costs, funding for PPE, support for municipalities and support for Ontario’s vulnerable, and long-term care.

In his response, Ford noted that Ontario’s taxpayers send $13 billion more to the federal government than they get back in federal transfers and services. He asked for Ontario to receive its fair share of that money, with the flexibility to fund its priorities, noting that the spending priorities facing Ontario are different from those in other provinces.

From a municipal perspective, Toronto Mayor John Tory responded that the federal government’s proposal represented “a first move by the Government of Canada but it cannot be the only news as it relates to cities.”

What remains to be seen is where this federal offer goes next: is it the first parlay in a federal-provincial negotiation or does it reignite debate about equalization and fiscal stabilization? Recall that in December, the Council of the Federation provided a united front calling for the federal government to strengthen the Fiscal Stabilization Program to make it more responsive to economic circumstances and downturns in resource sectors without compromising other transfer programs.

May employment report: some recovery, but unemployment remains high

Underscoring the federal offer of a safe restart over the next 6-8 months is the release of May’s employment report. In positive news, the May report indicated a 10.6 per cent recovery of COVID-related losses and absences from February to April. However, the overall picture continues to demonstrate the deep cut to employment made by COVID-19, with the unemployment rate increasing to 13.7 per cent in May.

While unemployment grew more slowly in May and the number of temporary layoffs stabilized, the growth in unemployment was driven by an increase in job seekers, especially among people aged 25-54 and students seeking summer employment. More than one-third of the potential labour force is fully or partially underutilized, compared to February’s rate of 11.9 per cent.

Ontario is the only province where employment declined in May, with 65,000 jobs lost. Quebec, which was earlier to begin easing restrictions, posted the largest increase in employment with a gain of 231,000 jobs. While other provinces also saw employment gains, unemployment rates continue upward trends with BC’s unemployment rate rising 1.9 percentage points to 13.4 per cent and Alberta’s unemployment rate increased 2.1 percentage points to 15.5 per cent.

Coming soon: Stage two of Ontario’s relaunch

Despite extending the declaration of emergency until June 30^th, Ontario will release its plans for stage two of its re-opening framework next week. Premier Ford noted that the second phase would not begin immediately, but the province’s plans would focus on getting people back to work and finding ways to get life back to normal for the summer. A phased plan for reopening childcare safely will also be released to support parents’ return to work.

The province has also begun turning its attention towards economic recovery, with the Standing Committee on Finance and Economic Affairs kicking off its study of the economic impact of COVID-19 this week, beginning with public hearings on the tourism sector.

COVID-19 response developments

• Members of the Industry Strategy Council have been appointed. Joining Chair Monique Leroux, the nine business leaders will meet every two weeks over the next 90 days to provide advice on economic policy to relevant federal ministers in support of Canada’s economic recovery. The Council’s composition resembles that of the Economic Strategy Tables, representing key industries of advanced manufacturing, agri-food, clean technology, digital industries, health and bio-sciences, resources of the future, and tourism and hospitality. Two new tables have been added to represent the retail and transportation sectors.
• The federal government has announced special payments for Canadians with disabilities and seniors. A one-time payment of up to $600 will be made to individuals who are certificate holders of the Disability Tax Credit.
• The federal government also announced that seniors will receive a one-time, tax free payment during the week of July 6, with seniors eligible for the OAS pension receiving a payment of $300 and those eligible for GIS receiving an additional $200. Seniors with disabilities will receive a total of $600 in special payments.