As appeared on CBC News
What we are experiencing today is clearly the worst public health crisis in modern history, which is creating the worst economic crisis in modern history, compounded by oil price wars significantly affecting resource provinces.
The government of Canada should be applauded for working hard to get money into the hands of struggling Canadians and Canadian businesses, and for taking bold steps to enable Canadians to manage cash flows better.
But more must be done.
Canada will need to provide a response to this crisis that is orders of magnitude larger than what was announced yesterday by Prime Minister Justin Trudeau.
In Canada, about 56 per cent of our nation’s economic activity is purely household consumption. Currently, other than toilet paper and pasta sauce, Canadians are spending very little. This means that approximately half of our economic activity is constrained, leaving both businesses and employees of those companies at risk.
Here in Alberta, about 22 per cent of the workforce is employed in retail, accommodations, food service and the arts and entertainment sector — exactly the sectors under threat right now.
That means nearly one-quarter of employed Albertans are at high risk, and they are also the ones that typically make the least from a monthly wage standpoint.
Additionally, our charitable and non-profit sector is being devastated due to lower donations and forced closures.
The personal, organizational and economic impacts of this are at a scale not experienced in modern times.
We cannot afford to let this crisis eliminate incomes, or erode wealth, retirement savings, nest eggs or prosperity. For if we do, this short-term quarantine will create economic and social problems that are with us for decades.
Our goal should be simple: not one Canadian, household, business or organization should be left worse off as a result of what is going on now.
Yes, this will cost a great deal of money. Fortunately, we live in a country where we have the ability to bring major supports to citizens in times of crisis.
Now is not the time for low interest rates and infrastructure spending. That time will come. The focus now must be on ensuring that Canadians are free to do what they need to do right now — stay home, stay healthy and limit the spread of the virus so that we do not overwhelm our healthcare system.
This means we need to remove the largest worries, which are income, rent and mortgages, and liquidity in the system.
To do so, the government should be considering large-scale responses, such as:
- A coordinated, unified large-scale national response that ensures consistent funding, programs and messaging across the country;
- Issuing a temporary basic income to all Canadians over 18 for an interim period, taking the pressure off business owners and organizations from having to provide payroll when business is impaired or closed. This can be recaptured in future tax returns for those that earn above a certain threshold;
- Suspension of all residential and commercial mortgage payments and rents for an interim period, at no interest cost (you can still make mortgage payments if you want to);
- Suspension of collection of all income and property taxes for an interim period (municipal, provincial and federal);
- Ensuring liquidity remains available to business by creating no-interest loans, loan guarantees, suspending principal payments on existing loans and suspending the ability of banks to call loans for an interim period;
- Creation of federal Troubled Asset Relief Program (TARP) modelled after the program developed in 2008 to purchase shares in distressed companies (for your information, the original TARP made a profit over six years once its holdings were sold);
- Providing a charitable/non-profit relief fund that enables distressed community organizations to access emergency funding.
All of this can be funded, backstopped and guaranteed through the financial credibility and stability of our federal government.
The key to this is to get the money and supports flowing immediately. This is about speed and efficiency; get it out the door and into the hands of Canadians and worry about bureaucracy and administration later, through future tax filings or some other means. There can be significant fines and penalties on the back end for those that abuse the system.
Trying to engineer the perfect way to get the right amount of money only into the hands of those that need it will fail or take too long. We must move fast now.
We encourage the federal government to be big and bold in its response. This needs to be a $150 to $200 billion solution. This is the kind of scale we need.
Remember, spending this money now is cheaper than decades of a stalled economy, Canadians without savings or homes, and a generation without opportunity.
This will cost a lot of money and will no doubt affect business as usual for landlords, financial institutions and others. The federal government can work with them to iron out some principles right now and get the programs running.
The barn is on fire. We need a full fire brigade to save the horses. Our future depends on it.
Adam Legge is president of the Business Council of Alberta.