Four ways the fall economic statement could help prepare all of us for the coming recession

7 Nov 22

This column by Armine Yalnizyan was originally published by the Toronto Star on Wednesday November 2, 2022. Armine is a Contributing Columnist to Toronto Star Business featured bi-weekly.

The fall economic statement comes out on Thursday and, regardless of what’s in this mini-budget, it promises to be a big deal.

The federal government’s regular fiscal update on how the budgetary year is unfolding usually doesn’t merit much of your time or attention. This year is different because so much has happened since April, when the federal budget was tabled.

Inflation is rising at a pace not seen in 40 years; though, unlike 40 years ago, the problem isn’t soaring wages, which today are badly lagging price hikes. Today the problem is a stubbornly inadequate supply of food, fuel and affordable housing — as well as an unknown degree of corporate price-fixing.

Russia’s never-ending invasion of Ukraine has choked off a surprisingly large share of global exports of wheat, fertilizer, maize, oil and gas.

The Bank of Canada has hiked borrowing costs six times since March, its most aggressive campaign to tame inflation since the early 1990s.

Reports from the International Monetary Fund forecast a world economy in decline; and

Canadian hospital emergency rooms are closing from coast to coast, for lack of staff.

People are anxious. The world is talking about recession. No matter Canada’s economic fundamentals — we are doing better on growth, inflation and even government borrowing than most places — we won’t duck bad times if the economies of the U.S., U.K., EU and China stall, or worse.

What can the government do about any of it? Help those struggling to choose between heating or eating, or even between food or shelter, by asking a bit more from those who saw a windfall in corporate profits and shareholder dividends.

Here are four ways to do just that, focusing on the most impact for the most people.

Employment Insurance: The Bank of Canada gives us a 50-50 chance of recession now to mid-2023. We are not recession-ready. In September, the federal government reverted to pre-pandemic eligibility rules, meaning fewer than four in 10 jobless people will find shelter from the coming economic storm. As in the early 1990s when the rules were last changed to cut access, more women than men will be affected. The time is long past due to solve the coverage problem, including who gets help and who doesn’t, how much and for how long.

The Care Economy: Social infrastructure is crumbling at a rate that would prompt rapid and generous investment if it were physical infrastructure. Do we have enough people providing the care we need? No. Are we supporting current workers, so we don’t lose more? No. Fund jurisdictions who have a plan for more training, better wages and working conditions and expansion of critical health-care and health promotion services. Help post-secondary institutions that create skill-laddering courses, as is done for trades in the U.S. With focused skills development, physician assistants, nurse aides and scribes could do many of the tasks we now ask of registered nurses or doctors. Help people learn and earn, while easing burdens on the exhausted.

Housing: Lending-rate hikes mean more people are in the rental market because they can’t afford a mortgage. Their relatively higher incomes put upward pressure on rents, and crowd out existing renters. A clear price escalation target should be established that triggers another rental benefit. Higher lending rates also stall construction on affordable housing. Fund the differences in borrowing rates to ensure these desperately needed projects go ahead. More builds should include a community benefits agreement component, so that marginalized Canadians get training and jobs, building community as you build the basic. Maximize the impact of every public dollar spent.

Windfall taxes: The federal government could extend the spring budget’s temporary tax on windfall profits in the financial and insurance sectors to energy companies and grocery conglomerates, or any company with a windfall in revenue due to soaring global inflation. Those revenues could be recycled to support the voluntary sector providing food bank and shelter services, which are at record levels; build affordable housing; expand community benefits; and increase training, recruitment and retention initiatives for the care economy.

I’ve shared these ideas in my columns, as well as with people from most federal and provincial political parties. My focus and concerns are no secret: shield those with the least from more harm in bad times; always boost the economy from the bottom up.

I know the finance minister and the Government of Canada have to balance a broader set of interests. But this government has already delivered on its “we’ve got your back” claim in such important ways: expanding the Canada Child Benefit and dramatically reducing child poverty; introducing the Canada Emergency Response Benefit during a global pandemic, which helped employment rates bounce back and Gross Domestic Product grow long before our peer nations; and launching an overdue national child-care strategy that could transform our economic future.

Quibbles aside, show me a more progressive federal Canadian government over the past half century.

Mini-budget makers, Canadians are counting on you to not lose your nerve or focus now.

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