We end 2021 the way it began — focused on COVID-19
Jacquie LaRocque, standing, smiling at camera
Since the election, the government has stuck to a basic script on the economy.
Under constant pressure from the Conservatives, economists and business groups about the high rate of inflation, Prime Minister Justin Trudeau and Minister Freeland have repeated that high inflation is a global problem caused by pandemic-related supply chain bottlenecks and high energy prices. Their bet, as I have described it before, is that these issues will moderate in time and the economy will continue to grow.
The Fall Economic Statement shows that the government is standing pat.
Indeed, even as inflation has become a steadily growing concern for Canadians, this has been at least partially offset by very strong economic and job growth.
Moreover, were this unique set of pandemic-related inflationary pressures to persist, the few effective tools that are available to tackle inflation — spending cuts or higher interest rates — would likely inflict a different kind of economic pain on Canadians. They could also derail the government’s agenda for billions in new investments in green energy, health care, child care, and Indigenous reconciliation, including the $40 billion dollars announced in the Statement to compensate First Nation children for the tragic failures of the child welfare system.
But the overriding justification for the government standing pat is the worrying resilience of the COVID-19 pandemic in the form of the rising Omicron variant wave. Recent case counts have jumped up into the thousands again across the country and into the millions again globally.
The worry among Canadians about the progress of Omicron will likely make inflation a lower priority and access to rapid testing and vaccines a higher priority. To be sure, Omicron’s unknown economic impacts cast a pall of uncertainty over the forecasts laid out today by Minister Freeland.
Given the rapid spread of the new variant, the government now finds itself backing away from its pledge to begin winding down some pandemic relief benefits.
So, we end 2021 the way it began — focused on COVID-19. Canadians have shown extraordinary patience and resilience over the past almost two years.
It is clear that COVID-19 remains a devious and unpredictable adversary that has ample power to upset the best-laid plans of governments and politicians.
With the fiscal update, the deputy prime minister acknowledged the challenges of navigating the economic recovery ahead, saying, “Turning the world economy back on is a good deal more complicated than turning it off.”