|Finance Minister Chrystia Freeland delivered an emphatic defence today of the use of fiscal stimulus and deficit spending to sustain the Canadian economy through what she called the “coronavirus recession” — and promised to rein it in only after widespread vaccination brings the virus under control. Speaking virtually to the Toronto Global Forum, Freeland argued the federal government can afford to continue spending on emergency support programs for businesses and individuals and that ending them too early would imperil the eventual economic recovery.
“We have a moral imperative, but also a hard economic imperative … to fight the coronavirus with all our might, and to provide our people and our businesses with a bridge to get through to the other side,” Freeland said. Rather than outlining any new policy measures or detailed fiscal targets, the finance minister’s speech laid out the principles guiding the government’s decision-making ahead of an expected fall update on the state of federal finances. Freeland said the government’s recovery plan will focus building an economy that is green, innovative and fair. Her remarks amount to the latest signal that the Liberal government plans to continue spending on support programs and key policy priorities even in the face of deficit levels not seen since the Second World War.
Freeland argued that Canada has the fiscal capacity to afford continued pandemic spending because its debt-to-GDP ratio remains lower than it was in the 1990s — when the country faced a debt crisis — and because of historically low interest rates. She added that Canada’s debt-servicing costs are also much lower than they were during that crisis. Opposition politicians have accused the Liberals of a lack of transparency when it comes to how much is being spent on emergency programs. The Liberals haven’t tabled a full budget since March 2019, and the last detailed update came in the form of a one-year “fiscal snapshot” tabled by then-Finance Minister Bill Morneau in July.