Canada economy 2021-

Written by  //  August 31, 2021  //  Canada, Economy  //  No comments

Highlights of budget 2021

Canada suffers shock economic contraction, casting shadow over recovery
The Canadian economy suffered an unexpected contraction in the second quarter, casting a shadow over the country’s efforts to recover from the effects of the pandemic.
Real gross domestic product fell 0.3 per cent, Statistics Canada reported Tuesday. It was an annualized drop of 1.1 per cent, and Canada’s first quarterly decline in output since the second quarter of 2020, when the first wave of COVID-19 ravaged the economy.
Exports were the biggest drag, tumbling at a 15-per-cent annualized rate. Vehicle exports were especially hard hit by supply chain disruptions, Statscan said in its report.
Throughout the world, in many different industries, key materials have been difficult to source and costs have risen rapidly during the pandemic. Freight rates have surged to record highs, and container ships now wait days to unload at ports, leading to incessant headaches for companies.
Let’s not forget about precarious work in this federal election — and beyond
Wayne Simpson, Professor, Department of Economics, and Research Fellow, University of Calgary School of Public Policy, University of Manitoba
(The Conversation) The pandemic is the backdrop to the ongoing federal election, and its attendant lockdowns have shone light on health and economic issues. Not the least of these is how job insecurity and low pay are inextricably linked to a wide spectrum of jobs and small businesses.
Unprecedented income support from the federal government temporarily cushioned the unanticipated losses of earnings for these unprotected workers. But the crisis has exposed just how vulnerable a significant portion of the work force can be to sudden shifts in economic circumstances.
Is precarious work an emerging problem that needs to be addressed beyond the pandemic?

2 August
British Columbia Christmas tree growers say intense heat singes prized trees, kills seedlings
(Globe & Mail) Sally Aitken, who teaches forestry at the University of British Columbia and is an expert on the effects of drought and heat on trees and plants, said the heat dome could have immediate and long-term effects for Christmas tree growers.
Trees the farmers have been tending for up to seven years could now be damaged and seedlings for future crops have also been decimated because of the heat, she said.
Up in smoke: How wildfires are tainting grapes and threatening the wine industry
(The Conversation) Fires can destroy vines and other vineyard infrastructure, such as the vine posts or irrigation systems, but even distant fires pose a risk to wine grapes, due to a phenomenon known as smoke taint. Smoke taint refers to the undesirable ashy, smoky aroma of wines produced from grapes exposed to wildfire smoke while ripening.

18 July
What Canada can learn from Sweden about creating middle-class retail jobs
Sean O’Brady, Assistant Professor, Labour Relations, McMaster University
Grocery-store cashiers and other frontline retail workers have helped get us through the pandemic, but do we value them? Why are retail jobs middle-class in Sweden, but low-wage work in Canada?
These were some of the questions I tried to answer over several years of published research on grocery-store workers in different countries.
My research has shown that in the late 1970s, Canadian grocery-store jobs were middle-class union jobs. Full-time hours were common, and Canada’s grocery store-workers were well paid by global standards for the industry.
The opening of discount chains like Super Carnaval in Québec in 1982 and megastores like the Real Canadian Superstore in 1979 forced traditional grocers to rethink their human resources strategies. In addition to making profit margins narrow, many of these new discounters — like Walmart which entered Canada in 1994 — were non-union.
The chains demanded that the unions work with them to lower labour costs and prevent them from losing money. Fearing what would happen to their members’ jobs if the chains went bankrupt (and some did), most of the unions worked with major grocers to cut wages and erode other key conditions set in collective agreements.
The result was a drastic reduction in the real wages of unionized workers from 1980 to 2016. Today, unionized retailers start at the minimum wage, or just above it.

12 May
Andrew Caddell: The 2021 budget: a disaster unlike any we have known
The experts at Finance must be tearing their hair out, even if they know this budget is designed to get the Trudeau Liberals re-elected. So much for the ‘wisdom’ of minority governments
(The Hill Times) … the recent federal budget. It is the antithesis of everything I ever learned, and mocks the fiscal prudence of Chrétien and Martin. It is understandable the government had to support the economy in a crisis, but we now know Canadians saved $200-billion during the pandemic, and wealthy hedge fund managers benefited from the $100-billion Canada Emergency Wage Subsidy program meant for struggling businesses. There is no need for further government spending.

26 April
Canadians unmoved by new federal budget as Liberals continue strong support: poll
(Global) …the high level of apathy for this year’s budget suggests Canadians aren’t focused on the country’s long-term financial outlook amid the COVID-19 pandemic, Ipsos public affairs CEO Darrell Bricker says. “An awful lot of (what Canadians are focused on) has to do almost exclusively with getting people access to vaccines and getting our lives back to normal. The budget didn’t really speak directly to those questions.”

19-24 April
NP View: Chrystia Freeland’s shortsighted, selfish budget
(National Post) By continuing to spend well beyond our means post-pandemic, the Liberals are ensuring that today’s youth will have to pay once again, when the bills come due
Monday’s budget was an exercise in fantasy. Finance Minister Chrystia Freeland doled out billions for longtime Liberal priorities under the ridiculous pretext of jumpstarting an economy that is already revving up. The minister should have ensured that the pandemic-related hit to our finances would be short-lived, but instead she used this as an “opportunity” to spend large sums of cash into the foreseeable future. This is extremely shortsighted and selfish. The debt we incur today will be a liability for future generations.
Andrew Coyne: Federal budget gives money to all, without a path to real economic growth
Whatever else it may be, this budget is certainly long: at 739 pages and 232,903 words, by far the longest in Canadian history. The previous record was 528 pages, in 2015.
The great Paul Martin budget of 1995 took only 197 pages to rescue Canada’s finances from disaster, while the landmark tax reform budgets of the late 1980s averaged less than 120. By comparison, this budget takes more than 200 pages just to describe its impact on gender equality, inclusion and other “quality of life” measures.
Perhaps some further statistical analysis will help. The word “support” appears nearly 1,000 times in the budget; “benefit” or “benefits” more than 1,300; “gender,” 740, “Indigenous,” 831. By comparison, the word “growth” appears just 280 times; “productivity,” 39, “competitiveness,” 13.
So you begin to get a broad picture of the government’s priorities, or rather the lack of them.

John Ivison: Budget gamble shows Liberals eyeing a September election (video)
Budget 2021 Misses the Opportunity to #TaxtheRich
Shreya Kalra & Katrina Miller
(Broadbent Institute) Despite promises it made in its 2020 Throne Speech, the federal government failed to “tax extreme wealth inequality” in the 2021 budget – the first federal budget to be tabled in two years. Instead, relatively minor measures to increase taxes on foreign digital sales and luxury goods tax, small movements towards closing the stock options loophole and reducing tax evasion, make up the scant package of tax reforms Trudeau’s Liberal minority government wants to move forward to help Canada recover from the largest economic setback in decades.
Federal Budget 2021: Ten key takeaways for the innovation economy
For innovation, the budget includes the most significant outlay of dollars since the 2017 edition with major expansions of innovation programs and cleantech incentives
(Financial Post) It is the first budget for Freeland and deputy finance minister Michael Sabia, who assumed their new roles late last year amid the pandemic. It includes programs designed to encourage employers to hire historically marginalized workers, and to get businesses to adopt new technology and spend on R&D — all longstanding drags on productivity in Canada. For the innovation economy, it also includes the most significant outlay of dollars since the 2017 edition, when the Liberals launched many of their flagship R&D, commercialization and venture capital programs.
Monday’s budget lays out $101 billion in new spending over three years, plus billions more in the years following. Finance Canada has projected a deficit of $154.7 billion for the 2021–2022 fiscal year. “I really believe that the greater danger today is not to invest in a strong recovery from the COVID recession, and not to invest in stronger, more robust, long-term growth for Canada,” Finance Minister Chrystia Freeland told reporters before tabling the budget in the House of Commons. The government is positioning its billions in spending as an effort to reverse decades of declining growth in real GDP.

Budget 2021: Address by the Deputy Prime Minister and Minister of Finance

Highlights of budget 2021:
Billions for green economic growth, healthier Indigenous communities
Budget vows to build ‘for the long term’ as it promises child care cash, projects massive deficits
The first federal budget document in two years is enormous and staggering in scope.
(CBC) Federal spending plan includes more than $101B to kickstart post-pandemic economy
“This budget is about finishing the fight against COVID. It’s about healing the economic wounds left by the COVID recession. And it’s about creating more jobs and prosperity for Canadians in the days and decades to come,” Freeland said in prepared remarks from her budget speech to be read in the House of Commons today.
“It’s about meeting the urgent needs of today and about building for the long term. It’s a budget focused on middle class Canadians and on pulling more Canadians up into the middle class. It’s a plan that embraces this moment of global transformation to a green, clean economy.”
It reveals that, over the past year, Canada ran up a deficit of $354.2 billion and plans to follow that up next year with a reduced deficit of $154.7 billion that is supposed to gradually decline to $30.7 billion in 2025-26.
Federal budget 2021: Liberals bet big that we can spend our way out of deficit problems
(Globe & Mail) In plotting a path for containing Canada’s post-pandemic debt and deficits, the federal Liberal government has embraced the route over which it has the least control. It might ultimately prove to be a wise course. But it’s certainly not a low-risk one.
… Economists have been saying for years that Canada needs to unlock productivity and expand its labour force if it is going to get out of a low-growth rut that looks likely to only get deeper as the country’s population ages. That growth is essential if governments of all levels are going to maintain services without descending into a debt spiral. Ultimately, a more robust economy may be the only true path to the country’s long-term fiscal sustainability.
Nevertheless, this is a major departure from our traditional approaches to fiscal management. We’re stepping into an abyss.

23 April
Sold over asking: Why homes are being sold for far more than their listing price
Willingness of some buyers to outspend everyone else imply homes in high-demand markets will sell at prices much higher than what they are listed for
Murtaza Haider and Stephen Moranis, Special to Financial Post

6 April
IMF upgrades Canada’s 2021 growth outlook by most among advanced economies
(BNN Bloomberg) In its World Economic Outlook published on Tuesday, the IMF said it now expects the Canadian economy to grow five per cent over the course of 2021, 1.4 percentage points higher than its previous forecast. That’s even more optimistic than the Bank of Canada’s expectation for four per cent economic growth this year, though the central bank’s last official estimate was made in January as COVID vaccines were just beginning to be administered.

3 March
Canada’s $100B question: Can you go too big?
(Politico) The Liberals show no sign of veering from Freeland’s mantra that spending too little would be far worse than spending too much on the Covid-19 recovery. And they’re hardly alone. Last month, U.S. Treasury Secretary Janet Yellen told her G20 counterparts it was time to “go big” with stimulus spending. Still, here at home, there’s a big question facing Freeland: how much stimulus does Canada actually need?
In her fall economic statement, Freeland promised up to C$100 billion in stimulus spending over three years, and the coming budget will set out how that money will be spent. Government sources told Reuters’ Fergal Smith and Steve Scherer last week they’re sticking with the stimulus plan, and that without it, “we run the risk of a lost generation of young people, or women who are not able to get fully back into the workforce.”
— In an op-ed for the Globe and Mail, a trio from the Institute of Fiscal Studies and Democracy at the University of Ottawa cautioned against permanent new spending and suggested focusing stimulus in such areas as infrastructure and R&D. Prime Minister Justin Trudeau’s recent mandate letter to Freeland also instructs her to “avoid creating new permanent spending,” but some have pointed out that Trudeau has since announced a new public transit fund that’s to be, well, permanent.

2 March
After worst year on record, Canadian economy enters 2021 with double digit growth
Jordan Press and Craig Wong
(The Canadian Press) The Canadian economy sprinted to the finish line of 2020 with nearly double-digit growth in the fourth quarter, ending its worst year on record on a strong note that has continued into the start of 2021.
The economy grew at an annualized rate of 9.6 per cent over the last three months of 2020, Statistics Canada reported Tuesday, down from an annualized growth rate of 40.6 per cent in the third quarter when the country fully emerged from the near-shutdown last spring.
Gross domestic product, income and expenditure, fourth quarter 2020

26 February
Federal deficit hits $248.2 billion for first nine months of 2020-21 fiscal year
The result for the April-to-December period compared with a deficit of $11 billion in the same period a year earlier.
The government says in its fiscal monitor that the unprecedented shift in the government’s financial results reflects the severe deterioration in the economy and the government’s response plan to the COVID-19 pandemic.

17 February
2021 budget the time to keep promises, act on COVID-19 recovery: MPs
The upcoming 2021 federal budget is going to be critical to setting in motion Canada’s post-pandemic recovery efforts and it’s time the government act on a series of promises the government has made, say MPs.
The House of Commons Finance Committee tabled a pre-budget consultation report on Tuesday, and it focuses on suggestions for how to keep up pandemic aid as well as supporting rebuilding the economy and key sectors, post COVID-19. It also calls on the government to make good on a series of commitments, such as national child care and pharmacare programs, while not setting the country on an unsustainable spending path.
The committee is recommending that in the 2021 budget the federal government takes action on child care by increasing funding, establishing national standards, or creating a nationalized system; put new money towards improving care in long-term care homes and other congregate living settings; and to move forward on enacting a national universal pharmacare program.

27 January
Politico Canada:
Liberals have a budget to prepare, for which Finance Minister Chrystia Freeland launched public consultations on Monday. This budget is presumably going to have to do many things: contend with the ongoing fallout of the pandemic, make good on promises from the fall economic statement (little things like a national child-care system), set out how the government is going to spend up to C$100 billion in planned stimulus, and make some mention of fiscal anchors or guardrails or wobbly banisters or something.

15 January
Deputy Prime Minister and Minister of Finance Supplementary Mandate Letter
Even as we continue to distribute vaccines across Canada, bold action continues to be required to fight this pandemic, save lives, support people and businesses throughout the remainder of this crisis and build back better. We need to work together to protect and create jobs, and to rebuild our country in a way that will create long-term competitiveness through clean growth. As articulated in the Speech from the Throne 2020 and Fall Economic Statement 2020, our four main priorities for making tangible progress for Canadians continue to be: protecting public health; ensuring a strong economic recovery; promoting a cleaner environment; and standing up for fairness and equality.

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