$14 BILLION FEDERAL OFFER TO PROVINCES AND TERRITORIES
In a move to build national confidence in the economic recovery, the Prime Minister has announced a federal offer to the provinces and territories—a one-time transfer of $14 billion for “targeted funding” to support a variety of initiatives and programs. An initial discussion of the offer was held during Thursday’s weekly conference call between the PM and the premiers.
Prime Minister Trudeau suggested that as the economy restarts, Canadians need a “standard of support” backed by a “safe restart national agreement.” The agreement would create a “Canada-wide plan” backed by “national standards” to ensure the re-opening of the economy is implemented “safely and carefully.” The PM enumerated several areas where federal funding would be available, including:
- The provision of personal protective equipment, for both health care workers and private sector employees;
- Cities and municipalities (public transit and community programs mentioned specifically);
- “Immediate assistance for vulnerable seniors”, including long-term care; and
- Paid sick leave, the cost of which the PM said the federal government would cover entirely.
Given the potential number of ways the PM suggested the federal money could be used and his reference to “flexibility” in his comments, it appears that the offer is intended to provide a menu from which provinces and territories will be able to choose. It is expected that the $14 billion framework announced Friday will be followed this week by a series of specific agreements and announcements.
The federal proposal for targeted transfers tied to specific sectors and the Prime Minister’s reference to national standards represents the strongest assertion of federal authority yet since the pandemic began. It comes amid the failure so far to craft joint approaches on take-up of the federal program for commercial leases, municipal deficits, and the federal sick leave initiative. The call for national standards and the use of tied (or conditional) transfers will no doubt provoke a strong reaction from several provinces.
The premiers of the two provinces hardest hit by the pandemic, Ontario and Quebec, quickly complained that the federal offer was not nearly enough to meet their needs. Premier Ford said, “Fourteen billion for all of Canada just won’t cut it. You spread that across Canada, it doesn’t even cover Ontario, not to mention Quebec. We have large populations with a lot of needs. And as much as we are grateful, I just hope it’s the start of a conversation, not the end of a conversation.” Toronto Mayor John Tory also said the federal offer was not enough: “It represents a first move by the government of Canada, but it cannot be the only news as it relates to cities,” Mr. Tory said, and he added that Ontario must now also put money on the table.
Premier Legault argued against the usual approach of allocating the money according to provincial populations. “We think the way to divide the $14-billion should not be based solely on population but also on the cost generated by COVID-19 since, relatively speaking, we were hit harder in Quebec than other provinces, We ought to have more than the 23 per cent that represents our population.” Mr. Legault also said the offer should not come with federal conditions, so the provinces can spend the money for needs they have identified.
To put the offer in context, the federal government estimates that thus far, it has paid for 90 per cent of all COVID-19-related government support programs. In addition, the COVID Transfer proposed by Trudeau is approximately the size of the entire current social transfer Ottawa makes annually to the provinces.
On Friday, Mr. Trudeau also spoke of the need for “national standards” in reference to the ongoing conversations between the two levels of government about exposure notification (tracing) and testing. The federal government continues to push for a national approach, although negotiations are highly technical, involving issues such as information technologies, digital codes/keys, personal security, and intellectual property. These talks are continuing.
THE CURVE IS FLATTENING
New federal data released on Thursday by the Public Health Agency of Canada present a clearer picture on Canada’s progress in containing the COVID-19 pandemic and a forecast of the continuing impacts of the virus. While the emergence of new cases has slowed in much of the country, Ontario and Quebec have accounted for more than 90 per cent of new cases reported over the last two weeks. To date, Ontario has recorded 29,403 cases and Quebec, 52,143. There has been no community transmission in Prince Edward Island, the Northwest Territories, Yukon and Nunavut.
The virus continues to disproportionally impact seniors in long-term care facilities; elderly Canadians represent 18 per cent of cases nationwide and 82 per cent of the 7,495 deaths from the virus that have occurred. Ninety-four per cent of deaths so far are among people age 60 and over.
The new federal projections forecast that Canada could experience between 97,990 and 107,454 cases and between 7,700 and 9,400 deaths by June 15.
UNITED STATES OF AMERICA UPDATE
In the middle of a pandemic, the United States has lanced a wound so deep that it goes back to its very foundation. For the past ten days, people have flooded the streets of their cities to protest the death of George Floyd at the knee of a Minneapolis Police Officer. The wound goes much deeper than that, however, and exposes the underlying flaws of the great American experiment. But it also demonstrates that Americans have never been afraid of fighting the good fight publicly, loudly and in full view of the world. This is the strength of America. Americans believe in themselves and in their experiment.
The President has encircled himself with advisors who were clearly caught off guard by the ferocity of the protests. Before George Floyd, the White House saw themselves on the home stretch in the fight against the pandemic. American cities were opening up, the economy was coming to back to life, the stock market was advancing again. The next phase was to have been about the election – a chance for the President to alternate trips to Mar-a-Lago with opportunities to speak to his base as he highlighted the recovery and American jobs.
Then came the walk across Lafayette Square. Americans were horrified to see their own military in battle dress uniforms stripped of unit insignia and name labels facing down their fellow citizens, using pepper spray and flash-bang grenades to chase out peaceful protestors. Military leaders have denounced the use of the armed forces and the Mayor of Washington D.C. invoked the Third Amendment and demanded that National Guard units from across the United States leave the city and return home.
By Sunday evening, the President began to see stalwart Republicans declare that they could no longer support him, some even outright endorsing his rival, Joe Biden. That said, there are still five months before election day, and a lot can change. But if the election were held tomorrow, polling suggests a Biden victory and a complete rejection of the divisive rhetoric and actions of the President.
Underlying the moment is the reality of a country struggling to come back from an economic crisis like no other. That crisis deepened divisions and will continue to do so if government policies and programs cannot be brought to bear to alleviate some of the financial pain. Job numbers have improved faster than analysts had anticipated, but the question of whether this is the marker of a V-shaped recovery or something less significant, has yet to become clear. In addition, racial inequalities within the workforce have been exacerbated by the crisis. Blacks and Latinos have been hit disproportionately hard by both the virus and unemployment.
The next step in the economic recovery will be dealing with the reality that many of the jobs lost will be a long time in returning – the retail, travel, hospitality, restaurant, and personal services sectors will have to face new costs as they reopen coupled with lower revenues. There are substantial tears in the fabric of the economy, as well as in American society, and the work to mend those both will take time.
OTTAWA TO ADVANCE GAS TAX PAYMENT TO MUNICIPALITIES
The Prime Minister announced on Monday last week that the federal government will advance $2.2 billion—the full payment of the federal gas tax transfer—to Canadian municipalities in the coming weeks to assist with the cash crunch they are facing as a result of the pandemic. Normally, municipalities receive this money in two payments during the fiscal year.
Premiers and big-city mayors called for a much larger fix to help municipalities cope with the lost revenue and added service demands caused by COVID-19, insisting that local governments need billions of additional dollars to fill the gap.
Vancouver mayor Kennedy Stewart said, “There is a showdown between the federal and provincial governments about help for municipalities. This is the first very teensy sign from the feds that they’re willing to move. They’ve shown one of their cards so now it’s up to the provinces. In other provinces, cities are in really bad shape because of transit. Toronto is really suffering.”
For his part, the Prime Minister said the provinces need to provide more support to municipalities. “There’s a range of services offered by cities that are at danger of disappearing,” he said. “Cities are the responsibility of the provinces. The federal government will be there to work with the provinces to support, to help flow money, but the provinces need to step up as well and that’s what we’re discussing right now.”
290,000 JOBS IN MAY
After the loss of more than three million jobs in April, the Canadian economy staged a bounce-back by adding 290,000 jobs in May, regaining about 10 per cent of the jobs it lost the previous month. Despite the job gains, the unemployment rate rose to 13.7 per cent as students joined the ranks of those searching for work. Most of the new jobs came in Quebec—230,900—which began re-opening its economy ahead of most other provinces. By contrast, Ontario lost 64,500 positions.
The addition of 290,000 new jobs confounded most economists’ forecasts; before StatsCan’s release of the numbers on Friday morning, Bloomberg’s poll of economists’ expectations was an average loss of about 500,000 additional jobs. Today’s numbers suggest that the April numbers measured the maximum impact of the shut-down of the economy and that the situation has stopped worsening. The question now is what the rate of recovery will be going forward.
SUPPORT FOR PEOPLE WITH DISABILITIES
Throughout the pandemic, the federal government has faced criticism for ignoring the needs of people with disabilities. Many face increases in the cost of living, such as higher grocery bills and delivery service fees. On Friday, the Prime Minister responded with the announcement of a one-time tax-free payment of up to $600 to help offset the higher costs of living during the impacts of COVID-19 for Canadians with disabilities.
“Whether it’s buying PPE, or covering the cost of support workers, many Canadians with disabilities are facing unexpected bills that can be hard to pay,” Trudeau said. The Prime Minister also announced the establishment of a National Workplace Accessibility Stream, to help people with disabilities find, and keep, employment. The federal government is also funding five new projects across the country that will help people get supportive devices to overcome barriers in the workplace.
TOURISM DOLLARS ON THE WAY
Economic Development and Tourism Minister Joly this week announced federal support for the tourism industry to support summer holiday travel inside Canada. The government will repurpose $30 million previously set aside to attract foreign visitors to instead support provinces and territories in convincing Canadians to discover their “own backyard” while international borders remain closed due to the pandemic. In addition, $40 million will go to supporting regional tourism agencies to help them adapt their operations to the pandemic in order to “save the summer differently.”
Charlotte Bell, CEO of the Tourism Association of Canada (TAC) called the announcement a “step in the right direction” but called for more talks with the government towards additional long-term action. An April report by the federal tourism marketing agency Destinations Canada forecast a drop in tourism spending in 2020 of about one-third over last year and the loss of about 263,000 jobs in the sector. On Friday, TAC launched an industry-developed recovery campaign that seeks sector-specific government support to ensure Canada has a tourism industry post-pandemic.
INDUSTRY STRATEGY COUNCIL APPOINTMENTS
On Tuesday, Innovation, Science and Industry Minister Bains announced the appointment of new members of the Industry Strategy Council. The Council was announced several weeks ago as a repurposing of the former sectoral tables set up at ISED as a result of the Dominic Barton future economic visioning exercise. The new Council is tasked with providing advice to the government on sectoral needs in the economic recovery process to begin this fall. The chair of the council is Monique Leroux.
The government’s Chief Science Advisor, Dr. Mona Nemer will join the Council, as will the following industry leaders:
- Murad Al-Katib, President and Chief Executive Officer, AGT Food and Ingredients – Agri-food sector
- John Baker, M.S.C., President and Chief Executive Officer, D2L Corporation – Digital Industries sector
- Rhonda Barnet, President and Chief Operating Officer, AVIT Manufacturing – Advanced Manufacturing sector
- Paviter Binning, President, Wittington Investments, Limited – Retail sector
- Ben Cowan-Dewar, Co-founder and Chief Executive Officer, Cabot Links – Tourism & Hospitality sector
- Karimah Es Sabar, Chief Executive Officer and Partner, Quark Venture – Health & Biosciences sector
- Karen Hamberg, Vice President of External Affairs and Sustainability, Westport Fuel Systems Inc. – Clean Technology sector
- Mark Little, President and Chief Executive Officer, Suncor Energy Inc. – Resources of the Future sector
- Sylvie Vachon, President and Chief Executive Officer, Montreal Port Authority – Transportation sector
IN THE HOUSE AND SENATE
Supplementary Estimates tabled
On Tuesday, the federal government released it Supplementary Estimates, outlining $87 billion in additional planned spending. While the lion’s share of the new expenditures is related to the COVID-19 pandemic, the government is also seeking Parliamentary approval for several additional items, including:
- $585 million for two support ships – the HMCS Protecteur and HMCS Preserver – which began construction in 2018.
- $481 million for the Federal Indian Day Schools Settlement Agreement.
- $468 million for child and family services on reserves.
- $395 million toward a Disability Insurance plan for unionized public servants “who have exhausted their sick leave credits and are unable to work due to a debilitating illness or injury.”
- $312 million to expand aviation security screening, including the purchase of full body scanners.
The government is facing criticism over this year’s estimates process, which will limit MPs to no more than four hours of debate on the floor of the House of Commons on June 17 to review and approve the spending detailed in this week’s report.
Industry Committee study of potential foreign takeovers
On Monday, the House of Commons Industry, Science and Technology Committee adopted a motion made by Michelle Rempel Garner calling for a study of the Investment Canada Act. The study will examine the extent to which strategic Canadian industries have been devalued by COVID-19 and the potential of foreign buyouts and takeovers, and to “determine whether or not Canada should place a moratorium on acquisitions from state owned enterprises of authoritarian countries.” The motion calls for the study to consist of no less than four meetings and that it be completed by June 21, 2020.
On April 18, ISI Minister Bains released a new policy statement, “Foreign Investment Review and COVID-19” which signaled that the government would provide enhanced scrutiny in relation to “foreign direct investments of any value, controlling or non-controlling, in Canadian businesses that are related to public health or involved in the supply of critical goods and services to Canadians or to the Government.” The statement also noted that this additional scrutiny will be applied until the economy recovers from the pandemic.
The Conservative Party has long expressed concerns regarding companies being taken over by foreign state-owned enterprises (SOEs) as a key foreign policy position. This has been expressed in recent campaigns and platforms, in conjunction with the party’s broader position on relations with the People’s Republic of China.
The contemporary context for this issue dates back over a decade, to when Chinese and Malaysian companies were seeking to acquire significant Canadian oil and gas companies. This meant the ownership, governance, leadership and finances and tax treatment of these firms would become opaque to Canadian governments and regulators. The Harper government struggled with this challenge, most notably allowing the China National Offshore Oil Corporation (CNOCC) to acquire Calgary-based Nexen Inc. but rejecting Petronas’ $5.9 billion attempt to acquire Progress Energy.
House of Commons Fisheries and Oceans Committee set up
The House Fisheries and Oceans Committee, which has not been operating during the pandemic, is now operating under the new virtual meetings regime, and began holding meetings this week. the committee is not likely to hold many meetings before Parliatment’s June 17th re-adjournment, but it appears the committee will continue studying COVID-19 impacts on the fishery and possibly hold a meeting on the Big Bar landslide on the Fraser River in B.C. that has blocked the access of salmon to critical spawning grounds up-river.
Four standing committees in the Senate are now up and operating. National Finance (NFFN) and Social Affairs, Science and Technology (SOCI) reconvened first and were recently joined by Ethics and Conflict of Interest for Senators (ETHI) and Internal Economy, Budgets and Administration (CIBA).
BRITISH COLUMBIA UPDATE
British Columbia is nearly 3 weeks into phase 2 of its restart and transmission of the COVID-19 virus remains low. As of June 4th, there were 201 active cases in B.C. and contact tracing efforts have reached 98% of contacts within 24-hours. B.C. added jobs in May, but the unemployment rate jumped another 1.9% as more people started looking for work. Unemployment is now at 13.4% with the youth unemployment rate at 28.9% but the StatsCan jobs data was collected during the week of May 10th -16th before BC’s gradual reopening began. The finance minister noted recovery support will target the sectors and people hardest hit as the restart progresses. Safety will remain the priority, as public confidence is central to recovery.
The Premier noted that the level of collaboration between provinces and with the federal government has been unprecedented and he praised the flexibility of the federal government. The Premier is still advocating for paid sick leave to be to delivered through E.I., but there has been no new information on that from the federal government. On the $14 billion in assistance to provinces, Finance Minister Carole James said B.C. has no further details but is keen to partner and combine efforts with the federal government.
There were a number of other announcements last week:
- C. schools opened on Monday, June 1ston a part-time and voluntary basis with about 30% attendance reported.
- The finance minister announced an emergency orderto prevent landlords who are eligible for the federal Canada Emergency Commercial Rent Assistance (CECRA) from evicting commercial tenants. The measure is intended to encourage uptake of the federal program.
- The BC government also released its Budget 2021 Consultationpaper as a part of budget consultations. The finance minister characterized Budget 2021 as a recovery budget.
- The government is directly working with sectors and gathering information to determine where $1.5 billion in recovery funding will be allocated. Decisions will be made by Cabinet and the Economic Recovery Task Forceis gathering information from organizations on the ground.
- The BC legislature will reconvene June 22.
As the Government of Alberta finished its second full week of its first “post COVID session” it was met with some good news. Alberta’s Chief Medical Officer, Dr. Deena Hinshaw reported only seven new cases of COVID-19 and 0 new deaths on Friday.
Seven is the lowest number of new cases since March 12, one week after Alberta recorded its first case of COVID-19.
The news is welcome to a government saddled with unique economic challenges as it charges through phase 1 of its economic relaunch.
Premier Jason Kenney disclosed that Alberta does not intend to extend the state of public health emergency when it lapses on June 15, a positive sign about the province’s handling of COVID-19. The Premier has also indicated that phase 2 of the province’s relaunch strategy will proceed, perhaps even on an accelerated timeline. It was also revealed that Alberta’s Auditor General will review Alberta’s response to the pandemic with initial findings being reported to the Legislature in the fall.
As of June 4, Alberta has 7,091 total cases of COVID-19 including 334 active cases, 6,611 recovered cases and 146 deaths.
- The Premier also indicated that the Fair Deal Panel report can be expected after the public health emergency ends in mid June.
- To give a better sense of Alberta’s fiscal situation, an outline of the provincial economy recovery strategy will be presented in June, with a comprehensive fiscal update delivered in August and a full budget presented in February 2021.
- All three reports are sure to be full of red ink as a result of crashing energy prices, decreased tax revenue and social packages delivered to Albertans during the pandemic.
- The Government of Alberta is committing $200 million in funding for eligible businesses and non-profits to access up to $5000 to offset a portion of relaunch costs. These funds can be used for implementing measures such as physical barriers, purchasing personal protective equipment, rent, employee wages, or on inventory.
- Alberta Health Services is implementing enhanced visitation for patients in acute inpatient and outpatient settings, including emergency department and urgent care. Patients will now be able to designate one support person to accompany them in outpatient units and two while in an inpatient unit.
With a provincial election on the way this fall, the Saskatchewan government continued its preparations, as the effects of the COVID-19 pandemic continued to ease. Only 10 new cases of the virus were reported last week and there are only 29 active cases in the province. The government announced this week the economy was on the “rebound” and reported a 12.5% unemployment rate, less than the national average.
The provincial government announced an increase in the minimum wage to $11.45 per hour effective October 1. The government is also providing commercial eviction protection for tenants; a new moratorium on evictions applies to landlords that are eligible to apply for the Canada Emergency Commercial Rent Assistance (CECRA) program but choose not to participate in the program.
Amendments to the Mineral Tenure Registration Act will allow companies longer periods to raise capital for projects and provide time for First Nations engagement; the government is also waiving expenditure requirements for 12 months, plus providing refunds for deficiency deposits after the relief period extension. In addition, the province expanded the temporary wage supplement to include more workers.
The Pallister government has announced consultations on its $120 million Risk Recognition Program. The program is a one-time, income-tested payment for low-income front-line workers intended to recognize the risk they faced while working during the pandemic. The exact amount received by individuals will depend on the program uptake, but could be as much as $1,000.
Ontario continues to struggle to get its COVID-19 case numbers down, while showing some progress towards more effective testing. Ontario’s confirmed new daily reported COVID cases have been averaging under 400 but well above the 200 initially set as benchmark for broader reopening of the economy. As a result, all Emergency Orders affecting the economy, including those affecting long-term care homes, have been extended to June 19. The province’s declaration of an emergency has been extended to June 30th.
Last week, the total of lab-confirmed cases topped 30,000 with 23,583 recoveries, and the death toll is above 2,400. Sixty-four per cent of deaths have occurred in long-term care homes. The province continues to ramp up testing with over 20,000 tests completed per day throughout the past week. The province’s pop up/mobile testing sites appear to be contributing to higher testing numbers.
In order to help overcome the identified gap in provincial COVID-19-related data, the Province of Ontario has appointed former federal Liberal cabinet minister, Dr. Jane Philpott, as a special advisor to support the design and implementation of the new Ontario Health Data Platform (formerly known as PANTHR). This data platform will provide researchers with access to anonymized health data that will allow them to better detect, plan, and respond to COVID-19.
Amid growing evidence that the bulk of COVID-19 cases are concentrated in larger urban centres and long-term care homes, despite his previous reluctance, the Premier seemed last week more open to reopening the economy on a regional basis, however no details were given as to how this might be accomplished. More details on phase 2 of opening the Ontario economy are expected this week, but it likely will be more targeted to sectors as opposed to regions.
To close out last week, Premier Ford announced the formation of a Premier’s Council on Equality of Opportunity. The new advisory group “will provide advice on how young people can overcome social and economic barriers and achieve success”. The council will also advise the government on long-term actions that can be taken to support youth during the COVID-19 outbreak.
The Ontario government also announced that it is further supporting Black communities to address the disproportionate impacts of COVID-19 on them by allocating $1.5 million in funding to organizations that support Black families and youth. This funding will be used to provide urgent COVID-19 supports and address the immediate needs of children, youth and families.
Last week, the Quebec government introduced Bill 61 with the purpose of speeding up infrastructure and especially the permitting process on crown land acquisition. The government provided a priority list of 202 projects identifying schools, roads, bridges and long-term care facilities. The government is aiming to pass the bill on June 12; it includes a clause that enables National Assembly to revisit the state of progress of projects every year.
Bombardier Aviation announced Friday that it will reduce its workforce by approximately 2,500 employees by the end of the year. These are permanent layoffs that will affect some 1,500 employees in Quebec and 400 in Ontario. Approximately 500 positions will be eliminated in Mexico and another 40 in the United States.
Quebec made several announcements:
- In culture, the Quebec government announced $400 million to support artists, cultural organizations and venues.
- A new fund has been created to support life sciences via Investissement Québec and Fonds de solidarité FTQ for an amount of 150 million dollars. The purpose of the new fund is to encourage the filling of gaps in the availability of capital funds for business development.
- $1 million will be provided to protect water environments and aquatic ecosystems.
- The Ministry of Education is planning a high schools summer school program for this summer.
- 87,000 applications have been received for the short beneficiary attendant training program.
ATLANTIC CANADA UPDATE
Newfoundland and Labrador
Today, Newfoundland and Labrador continued to relax its public health measures, moving the province down to Alert Level 3. Measures relaxed under Alert Level 3 include:
- Gatherings of up to 20 people while maintaining physical distancing.
- Campsites open for overnight camping with restrictions
- Medium risk outdoor recreational activities (e.g. team field sports)
The province is also now facing a class-action lawsuit filed on behalf of non-resident property owners who are unable to enter the province as a result of public health measures. The suit argues an infringement on charter mobility rights and comes amid similar challenges of public health measures in other jurisdictions.
In New Brunswick the government is mandating face covering in publicly accessible buildings and is now welcoming Canadians with immediate family and property in the province to enter, still subject to a 14-day self-isolation period. The province still considering next steps on easing those restrictions further among residents of other Atlantic provinces.
REACH OUT. WE’RE IN THIS TOGETHER
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