Finance Minister Bill Morneau speaks to the Canadian Club of Canada in Toronto, Friday, March 6, 2020. (Cole Burston / THE CANADIAN PRESS)

Feds have fiscal room to react to impacts of COVID-19, says Bill Morneau

Message came on a day that saw oil prices decline sharply and stock markets take a hit

Finance Minister Bill Morneau says the Canadian economy is strong enough to weather the economic impacts of the novel coronavirus.

“I recognize that there is a very large amount of uncertainty around the impacts of COVID-19, around the depth of the impact and the geographical spread and the potential duration,” Morneau said Monday on Parliament Hill.

The message came on a day that saw oil prices decline sharply and stock markets take a hit.

Morneau said the federal government has enough wiggle room in its finances to help individuals and businesses deal with the fallout.

“We’re also making sure that we tell people that we have their backs — that we are thinking about impacts on individuals, employees, that we are focused on how we can support businesses to the extent that businesses need to be supported in a challenging time,” he said.

“We a very strong fiscal position,” he said.

ALSO READ: B.C. records first COVID-19 death in Canada as province hits 32 cases

Morneau noted the federal debt as a percentage of the national economy, known as the debt-to-GDP ratio, remains relatively low.

“It provides us with fiscal capacity to deal with challenges, to help people today, to help our economy tomorrow,” he said.

But he was not sharing any details of those plans — or the date when the federal budget will be released. He also would not reveal whether he expects the deficit to be bigger than previously projected, given the sharp decline in oil prices and the hit the markets took Monday.

The Trudeau Liberals are being urged to ease access to federal sick-leave benefits, along with tax credits and other breaks, to help workers who feel they can’t afford to stay home when sick, as well as to help small businesses that might not have the cash flow to manage the effects of the outbreak.

The business and labour groups pushing for these measures say federal officials appear open to easing access and potentially waiving the waiting period for employment insurance benefits for workers who need to go under quarantine.

On Friday, Morneau said plans for Ottawa to help with these challenges are on the way.

Morneau has said the federal government can increase spending — up to $41 billion by the parliamentary budget officer’s most recent calculations at the end of February — and keep the debt-to-GDP ratio declining over the long term.

Then over the weekend came an oil-price war between Saudi Arabia and Russia that lowered the price of crude far below budget projections.

ALSO READ: Stocks slide on Wall Street over coronavirus and oil crash

The Liberal government’s economic update from late last year projected the price of West Texas Intermediate at US$57 a barrel for this calendar year. On Monday, it was trading around US$30.

The parliamentary budget officer has previously estimated a US$15 decline in crude prices would shave $4 billion off the budget for the fiscal year beginning April 1.

There will be an impact on federal books because Canada is net exporter of oil, said Mostafa Askari, chief economist at the Institute of Fiscal Studies and Democracy — a think-tank run by former parliamentary budget officer Kevin Page.

How the government responds to COVID-19 and this new shock to the economy should be assessed by whether the measures are temporary, timely, and targeted, said Askari, a former deputy budget officer.

Waiving the waiting period to receive EI payments would help workers who find themselves suddenly under quarantine, or encourage them to self-isolate to contain the spread of the disease, said Dan Kelly, president of the Canadian Federation of Independent Business.

“It would send the message that a worker could essentially not have to drag themselves to work if they were sick,” said Kelly, whose organization represents over 100,000 small- and medium-sized businesses.

ALSO READ: Thinking of travelling? Your insurance policy might not cover COVID-19

Likewise, reducing the number of hours necessary to qualify for payments would provide benefits to low-income workers who can’t afford to take time off for illness, said Hassan Yussuff, president of the Canadian Labour Congress.

“You’re going to have to find a way to help them get some income because in absence of that, they are going to go to work because they don’t know what else to do. They need the money to pay their bills.”

He added that his group has asked the government to consider asking banks and credit-card companies to relax payment schedules for those whose earnings are affected by COVID-19.

Trevin Stratton, chief economist at the Canadian Chamber of Commerce, said any tax credits and tax-filing extensions for affected businesses could help companies weather the economic storm by giving them short-term cash flow help.

Some countries, including Italy, have already enacted similar measures, while countries like the United States are considering them, he said.

The Canadian Press

Like us on Facebook and follow us on Twitter

CoronavirusFinance

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Requests for proposals for the first stage of a water treatment facility project have been issued by the City of Prince Rupert on Oct. 26. (Photo: K-J Millar/The Northern View)
Water treatment facility project in Prince Rupert enters first phase

Prince Rupert seeks proposals for assessment of water quality supply and treatment options

A Shoppers Drug Mart employee in Prince Rupert has tested positive for COVID-19 the company confirmed on Oct. 26. The last day the employee worked was Oct. 17. (Photo: K-J Millar/The Northern View)
Employee of Prince Rupert Shoppers Drug Mart tests positive for COVID-19

No COVID-19 public exposures alerts issued by Northern Health Authority for Prince Rupert

“We have to make a call out to address this now so our people don’t have to feel fearful,” said Tribal Chief Mina Holmes. (Carrier Sekani Tribal Council Facebook photo)
Carrier Sekani Tribal Council seeks Indigenous-led task force in northern B.C. hospitals

Request made in an open letter to federal minister Carolyn Bennett

NDP headquarters on election night, Oct. 24, 2020. (Katya Slepian/Black Press Media)
ELECTION 2020: Live blog from B.C. party headquarters

BC NDP projected to win majority government – but celebrations will look different this election

North Coast BC NDP MLA Incumbent is seen with her wife Andrea Wilmot and their son Lua, as well as their dog Duncan. Preliminary results on election night Oct. 24 show Rice is in for a third term. (Photo: K-J Millar/The Northern View)
Jennifer Rice is North Coast MLA for third term

Preliminary election results show NDP Majority government

Provincial health officer Dr. Bonnie Henry updates the COVID-19 situation, B.C. legislature, Oct. 26, 2020. (B.C. government)
B.C.’s COVID-19 case count jumps by 287, another senior home outbreak

Two more deaths recorded, community outbreak in Okanagan

An untitled Emily Carr painting of Finlayson Point was donated to the Art Gallery of Greater Victoria by brothers Ian and Andrew Burchett. The painting had been in their family for several decades. (Courtesy of the Art Gallery of Greater Victoria)
Never before seen painting by famed B.C. artist Emily Carr gifted to Victoria gallery

Painting among several donated to Art Gallery of Greater Victoria

The B.C. Centre for Disease control is telling people to keep an eye out for the poisonous death cap mushroom, which thrives in fall weather conditions. (Paul Kroeger/BCCDC)
Highly poisonous death cap mushroom discovered in Comox

This marks first discovery on Vancouver Island outside Greater Victoria area

100 Mile Conservation officer Joel Kline gingerly holds an injured but very much alive bald eagle after extracting him from a motorist’s minivan. (Photo submitted)
Rescued bald eagle that came to life in B.C. man’s car had lead poisoning

Bird is on medication and recovering in rehab centre

Janet Austin, lieutenant governor of B.C., was presented with the first poppy of the Royal Canadian Legion’s 2020 Poppy Campaign on Wednesday. (Kendra Crighton/News Staff)
PHOTOS: B.C. Lieutenant Governor receives first poppy to kick off 2020 campaign

Janet Austin ‘honour and a privileged’ to receive the poppy

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Premier-elect John Horgan and cabinet ministers are sworn in for the first time at Government House in Victoria, July 18, 2017. (Arnold Lim/Black Press)
Pandemic payments have to wait for B.C. vote count, swearing-in

Small businesses advised to apply even if they don’t qualify

A raccoon paid a visit to a Toronto Tim Hortons on Oct. 22, 2020. (shecallsmedrew/Twitter)
Who are you calling a trash panda? Raccoon takes a shift at Toronto Tim Hortons

Tim Hortons said animal control was called as soon they saw the surprise visitor

The duffel bags were found to contain 84 pounds of cocaine, valued at approximately $1.2 million and 198 pounds of methamphetamine, valued at approximately $960,000. Photo courtesy U.S. Customs and Border Protection.
2 men accused of fleeing border agents near U.S.-B.C. border with $2M in drugs

Cocaine and methamphetamine seized by U.S. law enforcement in remote Idaho area near Canadian border

Most Read