It’s not enough to say the federal government is spending too much money.
The same day that Finance Minister Chrystia Freeland was rolling out her fiscal update last week, with its $400-billion deficit and its up-to-$100-billion stimulus package, Silicon Valley scooped up one of Canada’s prized artificial intelligence companies and Imperial Oil wrote off a billion dollars’ worth of assets in Alberta.
The old economy is on the line, and the new economy is too.
But the Official Opposition, after issuing a quick complaint that the Liberals are spending “like a spoiled brat” and racing toward a debt wall, has focused its mini-budget critique almost exclusively on obtaining rapid tests and vaccine rollout.
The Conservatives repeat every day that we need a plan to get out of the pandemic, but when it comes to the economic recovery, we are left wondering: What is their plan exactly? We need all the ideas we can get right now.
For sure, vaccines can unlock recovery. But there’s been a lot of damage done to our economy over the past eight months, on top of underlying problems that pre-date the pandemic.
Element AI has received many millions in government support, with the hope that the Montreal-based company would establish Canada as a competitive and lucrative global hub in the digital economy of the future.
Instead, California-based ServiceNow Inc. snapped it up on Monday, immediately letting go most of the employees but keeping the patent applications and the big brains that birthed the firm’s technological innovation.
As for Imperial Oil, its $1.2-billion writedown of unconventional natural gas assets in Alberta is the latest scaling back for the energy giant in Canada due to low oil prices and poor prospects for the future.
Investment in the sector has steadily declined, and industry projections point to more of the same in the coming years.
Taken together, both developments speak to weaknesses in the Canadian economy – pre-existing conditions, so to speak – that will make our recovery from the pandemic recession that much more difficult.
The fiscal update this week doesn’t venture much of a response to these issues, but that leaves ample scope for the Conservatives to carve out their space in the debate about economic recovery.
Instead, finance critic Pierre Poilievre’s key point in the response to the mini-budget is that the deficit has ballooned out of control, and that the Liberals have frittered away the solid fiscal standing built up by governments (presumably Stephen Harper’s) of the past.
Leader Erin O’Toole adds that the deficit wouldn’t be nearly so large if the Liberals hadn’t prioritized the Canada Emergency Response Benefit over the federal wage subsidy early on in the pandemic. He argues that the CERB pushed people en masse into unemployment, while the wage subsidy – designed to keep people on the payroll even if there was no work to do – came too late.
He has a fair point about the chronology. But his party has backed those supports throughout the frenetic pandemic policy process and has hinted that it will again vote in favour of legislation enabling measures in this week’s mini-budget too.
Regardless, if the Conservatives insist that the deficit is too big, it would be helpful to know more about why – especially given that interest rates are expected to remain very low for many years and the cost of carrying the deficit for now is marginal. It would also be instructive to know which of the pandemic supports they think should be cut. We’re in this for a while yet.
More important than looking in the rearview mirror, though, is looking forward. What do they think should be done as the federal government designs a recovery package?
The package is meant to revive growth in a way that puts people back to work, helps working parents find child care, cuts greenhouse gas emissions, and promotes inclusion and equal opportunity.
Poilievre wants quicker approvals of natural resource development.
And in response to a series of pointed questions put to O’Toole’s office on Thursday, the Opposition leader had this to say: “We know that Canadians want to get back to work. We want to see a plan that allows small businesses to reopen their doors, one that fosters new jobs in our world-class industries, and a timeline to tackle the deficit. My priority is to get businesses rebuilt and investing again – that’s the way to reduce the deficit.”
That’s a cautious start.
“Building back better” doesn’t have to be just about environmentalists and child care, or be the purview of progressives alone. With a constructive debate, it can be about patent protection, sustainable finance and becoming more competitive too – all of which are well within the Conservative wheelhouse.
Heather Scoffield is a National Affairs writer.