Canada enacts Economic Stimulus Plan for COVID-19 amid calls for sustainable investment, not bail outs

With almost one million new employment insurance claims made so far during the COVID crisis and a grim new forecast by TD Economics just published, a special sitting of  Parliament on March 25 passed a economic stimulus package for Canada.  As described in  “Feds rejig benefits to get aid to workers affected by COVID-19” in the National Observer (Mar. 26), the new measures will combine and augment the two  previously announced benefit  programs into one, the Canada Emergency Response Benefit .   The core of the new benefit program will use General Revenues rather than the EI Fund, to provide “a $2,000-a-month payment for up to four months to workers whose income drops to zero because of the pandemic, including if they have been furloughed by their employers but technically still have jobs.” It is promised that the money will reach Canadians by mid-April, with an additional increase to the Child Care Benefit of $300/month/child beginning in May. The Ministry of Finance summary is here ; the fine print is in the Notice of Ways and Means Motion here .

In response to the government’s stimulus, David Macdonald has written  Unemployment may hit 70-year high, but new EI replacement will help”, which appears in Behind the Numbers from the Canadian Centre for Policy Alternatives (March 26). Macdonald identifies the  four industries at the highest risk of immediate job losses from the pandemic:  passenger airlines; arts, recreation, culture and sport; retail sector; and accommodation and food services (which alone employs 987,000 workers in normal times).  He then analyses how the benefits announced on March 25 will impact the approximately 2 million most vulnerable occupations within those industries.  The article also forecasts alarming unemployment scenarios across Canada, and specifically in  Canada’s cities, where service workers form a high percentage of the labour force. Some conclusions: unemployment in Calgary could rise from the already high 8.0% to a probable rate of 15.3%, excluding any further oil price shocks; Ottawa could rise from its February 2020 low 4.4% to 11.6% in the worst-case scenario; Toronto could see  an increase from 5.4% to 12.4% in the worst case; Montreal from 5.2% to 13.4%, and Vancouver 4.7% to 13.8%.

Calls for Sustainable investments, not bail outs

In reacting to the March 25 emergency stimulus measures, Julia Levin of Environmental Defence Canada raises the biggest elephant in the room: concern that money will be used to bail out the troubled oil and gas industry .  Environmental Defence warns :

“We applaud all of the federal parties for working together to take this positive step to pass legislation which will help those struggling” …. “But hidden inside this new law were changes that will make it easier for Canada’s export credit agency, Export Development Canada, to funnel billions more towards domestic oil and gas operations — without public scrutiny.”

Others who have spoken out against short-term bail outs: 

Civil society and labour unions: “No New Money For Oil and Gas Companies—Give It To Workers—Say Large Collection of Groups Representing More Than One Million Canadians” ,  an Open Letter to the federal government in advance of the March 25 announcement. It states: “Giving billions of dollars to failing oil and gas companies will not help workers and only prolongs our reliance on fossil fuels. Oil and gas companies are already heavily subsidized in Canada and the public cannot keep propping them up with tax breaks and direct support forever. Such measures benefit corporate bottom lines far more than they aid workers and communities facing public health and economic crises. “

265 Canadian Academics: As reproduced in the National Observer, another open letter to the Prime Minister from academics and advocacy groups  (with a list of the 265 signatories here )

A bailout for the oil and gas industry? Here’s why experts say it’s not a long-term solution” by Sharon Riley in The Narwhal , which notes that the  oil and gas industry has called for a postponement of increases to the federal carbon tax and  “a federal Troubled Asset Relief Program (TARP) modeled after the U.S. program developed in 2008 to purchase positions in distressed companies.” The experts who argue against it include Jeff Rubin (former chief economist with CIBC World Markets), Gord Laxer, (Professor Emeritus University of Alberta), Chris Severson-Baker (Pembina Institute), and Ian Hussey (Parkland Institute).  In “Bail out Workers, Not Fossil Fuels, Climate Advocates Tell Trudeau” in The Tyee (March 20),  Geoff Dembicki  discusses the same issues.

COVID-19 crisis is a tipping point. Will we invest in planetary health, or oil and gas?” (Mar. 24)  by Dr. Courtney Howard,  Board member of the Canadian Association of Physicians for the Environment.

Coronavirus and the economy: We need green stimulus not fossil fuel bailouts” by Kyla Tienhaara, Canada Research Chair in Economy and Environment at Queen’s University, published in The Conversation (Mar. 24). She argues that “Stimulus measures should either provide substantial environmental benefits such as greenhouse gas emissions reductions or re-orientate the economy to low-carbon activities, such as care work and the arts….   bailouts to the fossil fuel industry and airlines would be monumentally counterproductive.”

Tim Gray of Environmental Defence offers some specific alternatives in “How Canada can build an environmentally sustainable future after the COVID-19 Crisis” (March 23).

These same arguments are playing out internationally – Naomi Klein has released a new video at The Intercept,  explaining  how the Trump administration and other governments across the globe are “exploiting” the coronavirus outbreak “to push for no-strings-attached corporate bailouts and regulatory rollbacks.” She urges working people worldwide to resist such efforts and demand real support from political leaders during the ongoing crisis.”  In the U.S., the Climate Justice Alliance is part of that resistance, as described in Demand A People’s Bailout that Protects Workers while Ensuring Safe and Sustainable Energy  .