Canada will spend big to combat coronavirus, saying now is 'not the time for austerity'
Canada’s Liberal government, insisting on Wednesday that “this is not the time for austerity,” promised major new investments and initiatives to help the country battle back from the coronavirus pandemic even as a new wave of infections looms, Trend reports citing Reuters.
The administration of Prime Minister Justin Trudeau, which has already unveiled hundreds of billions of dollars in aid for people and businesses, promised a plan to recover more than a million jobs lost during the crisis.
“This is not the time for austerity,” it said. “Canada entered this crisis in the best fiscal position of its peers.”
The government made the commitments in the so-called Speech from the Throne, in which it outlined its plans and made clear the need to protect Canadians from COVID-19 as new cases spike, reaching 146,663 total cases and 9,234 deaths on Tuesday.
In a rare national address on Wednesday evening, Trudeau said a second wave was under way in the four biggest provinces.
“We’re on the brink of a fall that could be much worse than the spring,” he said. The government, he added, “will have your back, whatever it takes.”
The range of promises and mentions of significant investments could upset markets showing signs of nervousness about soaring budget deficits and debt. Canada lost one of its coveted triple-A ratings in June when Fitch downgraded it for the first time, citing the spending.
The Canadian dollar extended its decline after the speech, touching 1.3384 to the U.S. dollar, or 74.72 U.S. cents.
In his address, Trudeau said low interest rates meant Ottawa could afford the promised spending.
“Doing less would mean a slower recovery and bigger deficits in the long run,” he said, adding that long-term spending would be fiscally sustainable.
Spending measures already announced mean Canada’s budget deficit this fiscal year is forecast to hit C$343.2 billion ($256.5 billion), the largest since World War Two.
Ian Lee, associate professor of management at Ottawa’s Carleton University, said the speech represented a “very high-risk bet” by Trudeau.
“He’s gambling this massive increase in expenditures is going to generate very substantial growth,” he said by phone.