Some quick thoughts on Canada’s March 18th economic support package.
A few quick thoughts on the stimulus package (keeping in mind I am not an economist! Armine Yalnizyan, Frances Donald and Brett House are and are good follows.)
First, the media doesn’t get finance. This is NOT an $82B stimulus package. This is a $27B stimulus package, plus about $1B in interest costs for the $55B tax deferment. You can’t just add 27 and 55, they are very different things.
Second, we are doing less than most other countries, as far as I can tell. NZ package seemed very good. I expect there is more to come, and as someone said on twitter, there may be some negotiations behind the scenes with Provinces. Very hopeful about that.
Third, the recognition that many don’t qualify for EI and are the most in need is AMAZING. This is a huge, huge step. I am very hopeful this will continue after the crisis. They are replacing income for people who are self-employed, contractors, etc who do not qualify for EI. Very happy about this.
Fourth, the tax deferment is helpful. Keeping that cash will keep some people going. Also, the mental relief of not having filing taxes as a “to do” right now will be more beneficial than it will be given credit for and there’s not $$ attached to it.
Fifth, the 6-month moratorium on student debt, HST and child tax credits, etc. also helpful. Reducing expenses and getting cash into the hands of people who need it. I thought the ability to take out cash from your RSP would be broader.
Some not-so-good things starting with sixth, there isn’t enough in here about mitigating expenses. Things like reducing, waiving or pausing rent, utilities, property taxes. These are hard and require a lot of coordination but some other countries are doing it. I’m hopeful this is coming as some requires coordination with Provinces and Municipalities.
Seventh, the 10% wage subsidy to business is a hilarious joke. Revenue is down by 50–100% in many cases. This will be only marginally helpful. There is frankly very little in here at all for small business, especially local small business. If this is it, then I fear there will be very few of them left when this is done unless landlords are very generous over the next few months.
Eighth (really regretting making this a spelled-out numbered list. who does that?), not enough from the banks. Working with people to manage mortgages on a case-by-case basis is helpful, but doesn’t translate to potential rent reductions. Other countries have paused debt payments and paused rent. That’s what I think is needed. This to me is the biggest problem. I really want to see more coordination between governments and our biggest businesses.
Finally language. Please, please, please someone tell Morneau to stop talking about “money circulating through the economy” while telling people to stay at home. This language is what makes me worried they don’t understand what shutting everything down really does. It PREVENTS money from circulating through the economy, and that’s why this problem is different.
In sum, some good steps, underwhelming on the whole, and some things that are missing, especially as it relates to local small business. Make no mistake — this is a tough problem to crack. I will continue to push for some of the things in my post from Sunday, as it’s clear there’s more to come.