Opinion: Anxiety is on the rise as COVID-19 support dries up

The interview with Navdeep Bains kicked off with pandemic pleasantries about how the family was faring — inquiries about the children, their health and their anxiety levels.

As the innovation minister pointed out later in the discussion, it’s an entirely appropriate way to begin a conversation about the economic recovery.

He is leading a process working with industry leaders to reopen the economy and set the country very deliberately on a prosperous, competitive and low-carbon footing. And those aspirations would be incomplete without at least a hat-tip to the family finances that are under so much strain in the coronavirus economy.

“I think people want hope. People are still experiencing this crisis, dealing with this pandemic. People want hope. They want better outcomes for their kids. You and I started this conversation with our children. And ultimately, we see the world through the eyes of our kids.”

But the cold hard truth is: children may well be part of our long-term hopes for Canada to build back better, greener, with more diversity and inclusion and wealth, but they and their parents have been an afterthought in the near-term planning to rev up the economy.

Parents can’t really begin to participate in any kind of rebuilding of the economy or even simply return to work unless reliable, accessible and safe arrangements for their children — either in daycare or school — are nailed down, with the return-to-school date looming ever closer.

September is shaping up to be an ugly showdown for many families, and not just because of child care. Many of the supports that have kept them afloat through the economic crisis brought on by the pandemic will wind down at that point.

Unless federal and provincial governments and employers figure out in the next few weeks how to get out ahead of the crunch, income supports, wage subsidies and the loan deferrals that banks have granted household borrowers will fade away.

The programs were designed that way so that they wouldn’t become permanent and drive costs through the roof, and in the early belief that by September, this would all be over.

But it’s not over. It’s only over for some people and some industries who are going to have a hard time finding a full-fledged workforce, let alone customers with disposable income or fresh, new orders, unless solutions are found for expiring programs.

CERB, the $2,000-a-month benefit that goes to people who lost their jobs because of the pandemic shutdown, has already been extended once, until the end of August. But after that, people without jobs will need to return to the employment insurance system, with its many flaws and spotty coverage.

The recent fiscal update shows more than eight million people have already relied on CERB at some point and took home $53 billion in just three months. By the time the program wraps up, Ottawa expects to have spent $73 billion.

And while EI has been earmarked to rise an extra $10 billion this year compared to last year, to a total of $30.8 billion in payouts over 12 months, those numbers imply a much smaller group drawing down on the payment than is currently using the CERB.

The government has pinned its reopening strategy on the wage subsidy, doubling the budget for the program in the hopes employers will hire back their employees even if they’re not able to break even.

But the wage subsidy, which sees Ottawa pay for 75 per cent of a company’s payroll if revenues have dropped by 30 per cent compared to last year, is scheduled to wind down near the end of August as well.

Morneau is in talks to make the subsidy more flexible, but time is ticking.

The other key part of family finances is household debt, and that’s about to come to a head in September too. Commercial banks that had granted their stretch customers deferrals on their loans have mainly agreed to extend those deferrals until the end of September.

But when those loans come due, with interest, the household debt issues of the past will come tumbling down on many borrowers.

In a recent speech, Bank of Canada deputy governor Larry Schembri noted that 20 per cent of mortgage borrowers don’t have enough cash on hand to carry them through two months of payments. Commercial banks have allowed 700,000 borrowers to defer mortgage payments, Schembri said, and they’ve also granted deferrals and interest rate relief on credit cards, car loans and lines of credit.

“Going forward, some vulnerable households are likely to fall behind on their loan payments if incomes do not recover by the time payment deferrals end,” Schembri said, pointing in particular to the energy-dependent West, where the pandemic crisis has been exacerbated by low commodity prices.

That’s likely the polite central bank way of saying “figure out a better way by September, folks, or risk widespread financial pain among those who can least afford it.”

There is no doubt that finances for many families are improving. Statistics Canada’s latest job numbers on Friday show that now just a quarter of the workforce is sidelined by the pandemic economy, rather than a third. That’s encouraging.

Some of us are going back to work, but more men than women (especially mothers of young children). And accommodation, food services and the small companies that employ so many workers are still hamstrung.

But back to Bains and industry leaders and their strategizing to “build back better.”

Their group just held their third meeting to swap ideas, and Bains says they’re focusing on resilient economic growth that would position Canada to be a global force in the emerging digital economy and more aggressive on clean technology, using Canada’s strengths in artificial intelligence to boost all sectors.

They’re also talking about industries that are in deep trouble because of the crisis. They addressed airlines in particular — a sign that the government has now moved to Phase 2 of its pandemic response.

Phase 1 was the emergency shutdown which demanded a broad, agnostic bailout. Now, with the reopening, the government is looking at more specific help for deeply troubled areas, Bains says.

But: September looms — with its messy and ominous threat of faltering family finances and a workforce in disarray.

Growth can’t resume in a predictable way unless people can be assured of child care and demand for their goods and services. Inclusive growth, the ultimate goal of the Liberal government, is impossible in those circumstances.

While business groups are glad to see politicians focus on competitiveness and growth, and keep an eye on the long term, they’re worried about the lack of a plan for the near future — a silence that grew louder after the release of the government’s fiscal update that had plenty of figures about what has already happened, but little in terms of direction.

Policy-makers met the emergency head on with a mountain of money and they’re now brainstorming seriously about the long-term future — with heaps of ideas flooding into the public policy space from interest groups and experts alike.

But how do we coexist with the virus in the meantime, with its urgent requirements for extra space, extra caregivers, extra cleaning, extra attention to hygiene — all of which demand huge amounts of money and people and ambition, right away?

“We can’t just do this in a haphazard way,” says Trevin Stratton, chief economist at the Canadian Chamber of Commerce.

Those mothers desperately reading the fine print on back-to-school memos as they trickle in with ever-changing arrangements would say, cheers to that.

Heather Scoffield is a columnist with Torstar Syndication Services.

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