Four months into the COVID-19 pandemic, on July 8, 2020, the federal government released an economic snapshot of Canada’s fiscal situation. This was our first look at the cost of the government’s response to COVID-19.
The economic snapshot is not a substitute for the postponed 2020 Budget that was to be announced on March 30 of this year. The update does not make projections of Canada’s fiscal situation past the end of current fiscal year and it does not contain any new program spending. Rather, the update focused on:
- The cost of measures taken to combat COVID-19; and
- The impact of COVID-19 on the Canadian economy; and
- Canada’s recovery compared to the recovery of other countries.
- How were programs that the government implemented in response to COVID-19 received?
- The Canada Emergency Response Benefit was widely popular with over 8 million Canadians accessing the benefit. The program provides financial support to employed and self-employed Canadians directly affected by COVID-19.
- While 3 million workers benefited from the Canada Emergency Wage Subsidy Program, the program is considered to be overwhelmingly underused. The program provides eligible employers with a wage subsidy of 75% per employee. The objective of the program was to keep workers employed.
- The Canada Emergency Commercial Rent Assistance program is considered to have been largely ignored by landlords. Intended to help small businesses experiencing financial hardship, the program provides forgivable loans to commercial property owners to cover 50% of monthly rent payments for small business tenets.
- Not one company made use of the Large Employer Emergency Financing Facility. The program provides short-term liquidity assistance in the form of interest-bearing term loans to large Canadian employers affected by the pandemic.
- Important numbers
- The projected deficit for 2020-2021 is $343.2 billion; prior to COVID-19, the projected deficit was $28 billion.
- 30% of Canada’s workforce, equalling 5.5 million Canadians, either lost their jobs or saw their hours significantly cut through March and April.
- Economists expect the economy to contract by 6.8% in 2020. This is the sharpest decline since the Great Depression.