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Ottawa unveiled its roadmap to battle COVID-19, pledging to do “whatever it takes” to support the economy through the pandemic. Anthony Okolie talks with Sri Thanabalasingam, Senior Economist, TD Bank, about the potential impact of the plan.
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[MUSIC PLAYING]
- The federal government released a highly anticipated throne speech. Sri, what are the key takeaways?
- So for me, from the speech, what I really see was that the federal government made a number of promises in terms of the near and medium term agenda. So with all of these promises, that means costs will also be quite high. So the question is, where will that funding come from? So that, for me, is one of the key takeaways from the speech.
- OK. So let's dig deeper into the plan. Now, one part of the plan includes an extension of the wage subsidy program to next summer. This was much longer than people anticipated. Any concerns with this change?
- So, there is a bit of a debate about the wage subsidy program itself as to how many jobs it's actually supporting and whether those jobs would still exist even if that program wasn't available. So I think, you know, there could be both pros and cons to this. One pro is that we have seen that the wage subsidy program is supporting employment, even though it's quite costly. And that's the con is that it's a very costly program.
- And what's your take on the government's plan to support businesses, especially as we're seeing a potential for a second COVID-19 wave?
- So the government-- I mean, the speech itself was very high-level, not a lot of information was provided. But one thing that they did point out for those hardest hit industries, they will provide support for businesses that they are like in travel and tourism. And that support will be needed, especially as we go through or come to a second wave, because the revenues won't rebound quickly for these businesses.
- Now, the governor also announced a campaign to create one million jobs, but there are sort of vague on the details. What are your thoughts there?
- Again, you know, much like a lot of the speech, it is a very ambitious plan in terms of boosting investment in infrastructure and to provide, again, I think the extending of the wage subsidy program so that companies can retain and hire workers. It is a very ambitious plan, but as you mentioned, we don't have very much details on how they will go to achieve this. It sounds great, but more detail definitely is required.
- Now, the government also talked about a universal childcare plan. How significant is this?
- I think this is a pretty important aspect of the Economic Recovery Plan itself. One of the hardest hit areas during this pandemic had been women participation in the labor market. And we look at employment rates for women right now. It has come down to rates it was at in the early 2000s. So that's really concerning. And to be able to promote that, I think childcare and a plan around childcare is very important. So it will definitely help the economy in the short term as well as over the longer term if we can get more workforce participation from women.
- The green agenda was a small portion of the speech. Any surprises there?
- Not too much. We did know that prior to the speech itself, the government would be focusing on climate change as well as green investments and looking to the future and the idea of creating more sustainable growth. It was not a surprise that this speech focused on the green agenda.
- And just a few seconds left, but overall, what's a key takeaway for Canadians from the throne speech?
- I think a key takeaway here is that the government will do what it needs to in the short term, at least, so the idea of any sort of fiscal anchor I don't believe that they'll be adhering to. So if things do not go as planned or if it gets worse, I do believe that the government will step in to support both households as well as businesses.
- Sri, thank you very much for your time.
- Thank you, Anthony.
[MUSIC PLAYING]
- The federal government released a highly anticipated throne speech. Sri, what are the key takeaways?
- So for me, from the speech, what I really see was that the federal government made a number of promises in terms of the near and medium term agenda. So with all of these promises, that means costs will also be quite high. So the question is, where will that funding come from? So that, for me, is one of the key takeaways from the speech.
- OK. So let's dig deeper into the plan. Now, one part of the plan includes an extension of the wage subsidy program to next summer. This was much longer than people anticipated. Any concerns with this change?
- So, there is a bit of a debate about the wage subsidy program itself as to how many jobs it's actually supporting and whether those jobs would still exist even if that program wasn't available. So I think, you know, there could be both pros and cons to this. One pro is that we have seen that the wage subsidy program is supporting employment, even though it's quite costly. And that's the con is that it's a very costly program.
- And what's your take on the government's plan to support businesses, especially as we're seeing a potential for a second COVID-19 wave?
- So the government-- I mean, the speech itself was very high-level, not a lot of information was provided. But one thing that they did point out for those hardest hit industries, they will provide support for businesses that they are like in travel and tourism. And that support will be needed, especially as we go through or come to a second wave, because the revenues won't rebound quickly for these businesses.
- Now, the governor also announced a campaign to create one million jobs, but there are sort of vague on the details. What are your thoughts there?
- Again, you know, much like a lot of the speech, it is a very ambitious plan in terms of boosting investment in infrastructure and to provide, again, I think the extending of the wage subsidy program so that companies can retain and hire workers. It is a very ambitious plan, but as you mentioned, we don't have very much details on how they will go to achieve this. It sounds great, but more detail definitely is required.
- Now, the government also talked about a universal childcare plan. How significant is this?
- I think this is a pretty important aspect of the Economic Recovery Plan itself. One of the hardest hit areas during this pandemic had been women participation in the labor market. And we look at employment rates for women right now. It has come down to rates it was at in the early 2000s. So that's really concerning. And to be able to promote that, I think childcare and a plan around childcare is very important. So it will definitely help the economy in the short term as well as over the longer term if we can get more workforce participation from women.
- The green agenda was a small portion of the speech. Any surprises there?
- Not too much. We did know that prior to the speech itself, the government would be focusing on climate change as well as green investments and looking to the future and the idea of creating more sustainable growth. It was not a surprise that this speech focused on the green agenda.
- And just a few seconds left, but overall, what's a key takeaway for Canadians from the throne speech?
- I think a key takeaway here is that the government will do what it needs to in the short term, at least, so the idea of any sort of fiscal anchor I don't believe that they'll be adhering to. So if things do not go as planned or if it gets worse, I do believe that the government will step in to support both households as well as businesses.
- Sri, thank you very much for your time.
- Thank you, Anthony.
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