Viewpoint: How to build back better

By Medicine Hat News Opinion on March 4, 2021.

Canada, like the rest of the world has been seriously affected by the COVID-19 pandemic. Efforts to better control its spread and to accelerate vaccinating the population have occupied our governments.

Our next major undertaking is our country’s recovery. Finance Minister Chrystia Freeland presented the government’s plan for recovery on Nov. 30. The federal government will lead through expensive and elaborate social programs and with a shift to a greener economy.

The plan is to be inclusive, sustainable and reconciliatory – and they suggest it will create 1 million jobs. It must include youth, women, people with disabilities, racialized Canadians and Indigenous peoples. Skills training and employment support will help to build a stronger work force and to prepare people for good jobs. Affordable and inclusive high-quality childcare will be good for families, and it makes economic sense.

Climate action must be at the heart of this plan to create 1 million jobs, for example, making homes and buildings greener (retrofitting) and investing in nature (reforestation), in renewable energy and in electric vehicles. The cost is projected at $70-100 billion (3-4% of the GDP) over three fiscal periods.

Government emergency spending during the pandemic was appropriate, but not necessarily efficient. Recovery spending will have to be financed by either borrowing and/or increasing taxes. Targeted tax reductions could help to stimulate the recovery, but such programs are highly unlikely.

Some of Canada’s personalities in economics, public policy and governance have a different approach for our country’s recovery. (Fraser and Madonald-Laurier Institutes, University of Calgary School of Public Policy). Some government spending in research, education, public health and safety and physical infrastructure will help to improve productivity.

But, economic recovery in the creation of more wealth should be through the private sector. Businesses and industries with a proven, successful record should be the leaders — the energy industry, mining, forestry and agriculture. They are able to create wealth quicker, which should result in more revenues, in more jobs and incomes and in more taxes paid.

The federal government must relax its regulations so the energy sector in Western Canada may be revived, for example, amend Bills C-48 and C-69 and hold passage of the United Nations Declaration on Rights of Indigenous Peoples. The climate change priorities need adjustment. Policies and regulations should exist, but they should not negatively affect a return to prosperity for Canadians.

Canada’s economy is stressed: unemployment 9.4% (1.9 million), the gross domestic product declined by 6% and our national debt has increased to $1.1 trillion. The federal government’s spending in 2020 was nearly 50% of the GDP (21% in 2019). Livio Di Matteo of Lakehead University warns that economic growth will be at slower rates when government spending exceeds 30% of GDP.

Yves Giroux, the Parliamentary Budget Officer, has stated that our government has three options for a return to a sustainable economy: cut government spending, increase taxes and/or grow the economy. Now, what kind of plan will build back better?

Larry Samcoe is a Medicine Hatter. His column, Viewpoint, will run on the first Thursday of each month. Feedback can be sent to letters@medicinehatnews.com

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