President of the Treasury Board, Jean-Yves Duclos says he has “a good degree of confidence” in Canada’s ability to exit the recession created by the novel coronavirus outbreak.
“The alternative, if we didn’t do this, would be depression,” he explained. “A depression is a recession which is a lot longer and a lot deeper than a recession and with consequences for the coffer that would be even greater.”
He said if the government didn’t act quickly, unemployment would increase further, wages would drop and the deficit and debt would “increase rapidly.”
“And we are acting quickly, again, to avoid moving from a recession, in which we are obviously finding ourselves now, towards a depression,” he said.
As the pandemic hit Canada, the government ramped-up its spending, developing emergency programs aimed at keeping Canadians afloat while schools and businesses closed their doors.
READ MORE: Coronavirus — Federal deficit will likely hit $252B this year, budget watchdog says
On Thursday, Parliament’s budget watchdog released a report which said it’s likely the federal deficit for the year will hit $252.1 billion and could go even higher if emergency measures remain in place longer than planned.
The figure is an estimate based on the almost $146 billion in spending measures the government has announced to help cushion the economic blow from the pandemic, estimated declines in the country’s gross domestic product, and the price of oil remaining well below previous expectations.
Asked if Canadians can expect to see tax increases or cuts to government programs as a result, Duclos said for now, officials are focused on handling the emergency.
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But, he said Canada entered the crisis with a “strong economy,” and had the strongest fiscal situation of all developed economies.
“We had full employment,” he said. “So we started from a very strong position and we are confident that the economy will rebound quickly once we go through the health crisis because as we all know, this is initially a health crisis.”
He said that is why all Canadians “need to do our part” and follow guidance from public health officials.
“But because of the strength of the fiscal situation and the strength of the economy before the crisis, we have big confidence in moving the economy back quickly to a stronger position,” he said.
According to Duclos, the “absolute priority” is getting Canadians back to work.
“If you want to decrease the fiscal costs, you want to reduce the deficit,” he said.
“We need people back to employment.”
“Now, we know we’re going to do that better and more quickly if we maintain the economic fabric of our society and the particular small business fabric of our economy.” He said Canada’s growth for years has been driven by the ability of small businesses to invest in workers and the economy.
“That’s why a very important objective of the plan — it’s a big plan — is to maintain the ability of small businesses to go through the crisis and then to emerge strongly, and to rehire as many workers as possible,” he said.
On Saturday, Canada’s chief public health officer, Dr. Theresa Tam issued a statement saying Canada has managed to bring the rate of infection down, by heeding the advice of medical authorities.
“We are flattening the curve,” she wrote.
And, over the last several weeks, provinces have begun releasing their plans to reopen their economies, with some already starting to relax restrictions.
Canada’s hardest-hit provinces — Ontario and Quebec — will begin reopening Monday, May 4.
However, Prime Minister Justin Trudeau has warned that things will not return to normal until an effective treatment or a vaccine is developed.
–With files from The Canadian Press