OTTAWA -- Hyping his government’s coming stimulus plans—as announced in the fall economic statement presented on Monday—Prime Minister Justin Trudeau says that the Liberal approach to lifting the country out of the COVID-19 economic recession won’t be achieved through cuts.
“We all remember what happened when the previous government cut support too quickly during the 2008-2009 recession. That will not be our approach,” Trudeau said, during his Rideau Cottage address on Tuesday, referencing the funding cuts made by former prime minister Stephen Harper more than a decade ago.
Trudeau said that with vaccines on the horizon, the Liberals are starting to look in earnest at what comes next, and that will include a stimulus plan of between three and four per cent of Canada’s GDP, depending on the state of the economy and deficit at the time.
"This will be a significant investment to get our economy back on track, and it’s an investment that will make sure no one gets left behind. We need to address the very real gaps this crisis has laid bare… Because we are all better off when everyone can contribute to their full potential,” Trudeau said.
The fiscal update showed a best-case $381-billion deficit, billions more in new spending on COVID-19 aid, and plans to launch into up to $100-billion in austerity once society begins rolling back into some form of normalcy, potentially just in time for an early federal election.
The 237-page document also outlined a suite of promises targeted at key demographics. Among them:
In an effort to quell concerns raised about the lack of fiscal anchor and the absence of a plan to ever return to a balanced budget, the Liberals introduced what they are referring to as “fiscal guardrails” in the economic update. These metrics, such as the unemployment rate, are meant to inform how much spending the economy can handle, but economists have said this approach likely won’t stop the calls for more fiscal restraint.
With the legislation to implement Deputy Prime Minister and Finance Minister Chrystia Freeland’s economic statement on notice, the question in the House of Commons will now shift to whether or not the proposals for spending the Liberals have presented, merit s the backing of the opposition parties.
The initial reaction on Monday from the Conservatives was that the Liberals are putting the economy “on hold” due to what they described as a delayed COVID-19 response, while the New Democrats came out warning that with so much spending ahead, eventually “austerity is coming.”
However, neither party has committed outright to backing or voting against the fiscal update.