THE WEST BLOCK
Episode 44, Season 9
Sunday, July 5, 2020
Host: Robin Gill
Guests: Ken Peacock, Phil Fontaine, Bonnie Glaser
Location: Vancouver, B.C.
Robin Gill: This week on The West Block: economic uncertainty.
Unknown voice: “Companies are spending less money on expanding production.”
Prime Minister Justin Trudeau: “A lot of people need help getting back on their feet.”
Robin Gill: Then, an Eastern bubble.
Antony Robart, Global News Anchor: “More regions of this country are easing up on public health restrictions and allowing people more freedom to get together. The four Atlantic provinces have agreed to a so-called ‘Atlantic bubble’.”
Robin Gill: Then, a turning point for reconciliation.
Dawna Friesen, Global News Anchor: “At a time when we’re confronting some hard truths about racism.”
Unknown voice: “Listening to Indigenous voices who are very outspokenly speaking.”
Robin Gill: And, fighting to free the two Michaels.
Prime Minister Justin Trudeau: “Arbitrarily arresting random Canadians.”
Bonnie Glaser, Centre for Strategic and International Studies: “There are still options for Ottawa to continue to pursue.”
Robin Gill: Hi everyone. Today, The West Block is coming from the West Coast. I’m Robin Gill in Vancouver.
For weeks now, the prime minister has been pressed on presenting a fiscal update. Well, the federal government is finally giving us a financial snapshot of government spending this week.
The last time the federal government gave us a look at the finances of this country, the 2019-2020 deficit was projected to be $26.6 billion and expected to improve to $11.6 billion by 2024-2025. Well we know that’s out the window, the government is borrowing heavily to keep the economy afloat. The parliamentary budget officer is forecasting a $256 billion deficit for this year.
Ken Peacock is the chief economist with the B.C. Business Council. He joins us from Burnaby, B.C. Ken, Parliament has been asked to authorize massive amounts of spending to mitigate the economic damage of COVID-19. How are we going to get out of this hole?
Ken Peacock, Chief Economist Business Council of B.C.: Well yes, they have absolutely been asked to authorize massive amounts of spending. You’re right, more than $250 billion so far. So it’s a great question. I would make a distinction. If you’re talking about the fiscal hole, so that’s the deficit and how the federal government is going to address the deficit, that is going to take many, many years, it might be upwards of a decade before they get the deficit eliminated and start paying down the debt. If we’re talking the economic hole, it’s also very deep, but I would think we probably will be returning to kind of where we were prior to the pandemic within a couple years in terms of economic output and then we’re going to need to see the economy grow to begin to start paying down that deficit and paying down the debt later.
Robin Gill: The prime minister has said the economy is moving from an emergency to a recovery phase, but this pandemic isn’t over. There is still the fear of the second wave. Is this premature of the Liberal government to say this?
Ken Peacock, Chief Economist Business Council of B.C.: So no, I don’t think so. No, because I actually am happy to hear governments talking about recovery and this is because we’ve had lockdowns imposed on the economy, activity in the hospitality sector grounded to a halt, the retail sector ground to a halt, so there is an inordinate amount of pain and it is absolutely appropriate for government to begin to shift and start thinking about the economic recovery, what needs to be done. I absolutely—I get your point that’s kind of implicit in the question. Of course there are concerns with the risk that the virus is going to have outbreak again and another spread. This is one of the challenges but government is going to have to find a way to walk that line of gradually opening up the economy and turning to the issue of economic recovery, and I say that just because of the inordinate amount of job losses. We’ve got to get people back to work. We’ve got to get that unemployment rate down. So the shift in my mind is appropriate.
Robin Gill: The prime minister did reject the idea of a fiscal update until now, arguing it’s too hard to predict what will happen given the times we’re in. Do you agree with that?
Ken Peacock, Chief Economist Business Council of B.C.: Yeah, it was a bit of a—it was certainly a challenging time. It was interesting that the federal government took a pass on the fiscal update, the Bank of Canada I’ll also note that they didn’t provide a forecast when they released their monetary policy report several weeks back. So it is understandable. It was such crazy times for economists. Economic models, the traditional models that these institutions use, the government and the Bank of Canada, could not handle the magnitude of the downturn and just what was going on, so the traditional tools weren’t available to economists. So it was a challenging time. Now having said that, it is possible to take a shot at what the downturn might look like. So it was a little bit—perhaps a little bit cowardly, but given the fact that revenues were plummeting, the economy was slowing dramatically and money was being shovelled out the door for lack of a better term, very, very rapid pace, I understand. I’m a little bit sympathetic with the whole notion of just trying to figure out where exactly we are being difficult. I’m an advocate and the supporter of more information is always better. Governments should be communicating to people as much as possible, but misinformation or problematic information may not be helpful. So waiting for a clearer picture I would say is not a bad move for the prime minister.
Robin Gill: You’ve talked about how the different provinces are opening at a different pace. How does that affect the overall economy?
Ken Peacock, Chief Economist Business Council of B.C.: Yeah, this is something I’ve talked about. We wrote up in our recent economic forecast publication at the business council and this is something I’ve been concerned about right from the outset, because in the early days of the virus it was sweeping across different countries at different rates, countries were having variable success in containing and fighting the virus. And when I look at what’s going on now, it’s, of course, cases are rising in the U.S. There are still challenges in eastern Canada. B.C. is in a very, very good position, but as long as we’re in such good position, I envision a world where we’re going to be reluctant to open our borders, let travellers in and so that is going to continue to weigh on the economy. International tourism is very, very important for the provincial economy. Business travel, families all this, as long as that can’t come back because we’re concerned about the virus in other jurisdictions coming to the province, it’s going to weigh on the recovery process. And this uneven kind of evolution of the virus and policy responses across jurisdictions, I think, is very problematic for the recovery over the next couple of years.
Robin Gill: So how long can provincial governments and federal governments dole out this money and try to sustain our economy?
Ken Peacock, Chief Economist Business Council of B.C.: Yeah, that’s a great question. So I would draw a distinction there. There’s this emergency funding that the federal government in particular has been putting out and spending and then there’s this more traditional fiscal stimulus, which is infrastructure spending and spending on retraining individuals in the workforce and whatnot. So the fiscal stimulus part where you get productive assets from investing in infrastructure, that can go on longer and I expect that to be an integral part of the federal government’s rebuilding strategy. The prime minister was just on television this morning talking about some of these projects here in B.C. The sort of emergency funding, the wage subsidy program and the CERB, that is a bigger question. That cannot go on indefinitely, obviously. It’s hugely expensive and I think you’re going to have to see those programs wrap up fairly shortly. Both of those, the wage subsidy and the CERB were extended recently. I’m sympathetic to the need to extend it because people—there’s still high unemployment and a lot of people are in difficult circumstances. Myself, I probably would have looked to start scaling back the CERB a little bit, because it is going to have to be withdrawn at some point. So I would look to that sort of emergency funding money to be scaled back quickly, but don’t look for fiscal stimulus and infrastructure spending money to dry up anytime soon. That’s going to go on for several years, if not longer.
Robin Gill: Okay, Ken Peacock, thank you so much for your time.
Ken Peacock, Chief Economist Business Council of B.C.: You’re very welcome. Thank you for having me.
Robin Gill: Up next, the call to cancel Canada Day. Does it help or hurt reconciliation? We’ll put that question to the former head of the Assembly of First Nations.
Chanting Protestors: “There’s no peace, no killer police. No justice or peace, no killer police.”
Robin Gill: This past Canada Day wasn’t a celebration of this country for these protestors. The movement called Cancel Canada Day held rallies across the country to draw attention to Canada’s racist past: encourage inequalities within Indigenous and racialized communities.
Joining us now from Nelson, B.C., Phil Fontaine, former Chief of the Assembly of First Nations, who has been vocal on these issues. Phil, before we touch on these protests, let’s talk about the Trans Mountain pipeline expansion project. The Supreme Court of Canada decided it will not hear an appeal by three First Nations groups in B.C. that have been trying to stop the project. Now keeping in mind that you have worked with energy companies on promoting another pipeline, did the federal government fail to consult with these groups?
Phil Fontaine, Former National Chief of Assembly of First Nations: The Trans Mountain pipeline wasn’t the easiest issue to deal with. The Supreme Court of Canada has made it very clear that it is satisfied that our nations were consulted in a meaningful way and that project must proceed. And I say that knowing full well the oppositions to the project, but I also keep in mind that there are many, many nations along the route and beyond that are favourable to proceeding with the project. I’ve always been a strong believer that development if it’s undertaken in a good way, in a sustainable way that recognizes and protects the environmental interests of our people and that these projects are in fact, a way to reduce poverty-related issues in our communities, of course I will support the projects of that nature.
Robin Gill: You talk about moving forward when it comes to Indigenous communities working with energy companies. How can that happen without any conflict?
Phil Fontaine, Former National Chief of Assembly of First Nations: Well, I believe that there are a couple of factors that play into this. One is that the courts have been very clear that Indigenous peoples have distinct rights over their lands and territories, and that those rights have to be considered very seriously and carefully, and that there isn’t a single project anywhere in the country that can or ought to proceed like without the meaningful participation and involvement of our peoples. That’s one major consideration. The other is that our people are getting quite concerned about matters and the way they used to be dealt with. Now, they’re looking at these projects in a way that I think to them, and to many, is a positive process that our people are talking now, and this is distinct language, joint ventures, equity positions, ownership and the like. And that suggests to me that there’s been a change in attitude to use that kind of language.
Robin Gill: All right. Let’s switch gears now and talk about all these protests that have been happening right across the country. Are they effective in getting out the message about racism in this country, especially when it comes to First Nations?
Phil Fontaine, Former National Chief of Assembly of First Nations: Well, the protests, I think, are really important. They bring attention to our issues, but they can’t be taken and looked at in isolation because there are a whole number of other things that have occurred over time that ought to have brought attention to Canadians about the distinct interests and special—distinct and special interests of our people. In every part of the country, reports and inquiries, the fact that we’ve become more involved politically, we’ve become better educated and now, there are many, many more communities that have become very involved in development in positive ways. And so we just can’t dismiss the protests is the point I’m trying to make, but we should consider them in together with all of the other important matters that have taken place over the last while.
Robin Gill: We have seen so many anti-racism protests and mostly focused on Black Lives Matter. Have the issues facing Indigenous communities taken a back seat to this movement, or could this be a turning point for all racialized communities?
Phil Fontaine, Former National Chief of Assembly of First Nations: Well the Black Lives Matter movement is a worldwide movement, and my concern was that Indigenous issues would take a back seat, but really we’re looking at a multi-layered issue and Indigenous peoples are a very important issue. And to my way of thinking, when we talk about Black Lives Matter, Indigenous-related issues and systemic racism, I mean when we talk about our—the Canadian situation, we’re talking about impoverished First Nation communities. The largest single issue, the most important issue facing Canadians today is the eradication of mass poverty in First Nation communities.
Robin Gill: What do we need to see from governments and businesses to make it better?
Phil Fontaine, Former National Chief of Assembly of First Nations: Well I think from government, there has to be a continuation of their commitment to resolving the many outstanding issues related to Indigenous peoples, and we’re talking about land. We’re talking about institutional racism. We’re talking about policing. We’re talking about decent housing. We’re talking about a whole range of issues that government has expressed a commitment to resolving these issues, but they can’t be resolved in isolation. And the point I’m making here is government can’t do it alone. It has to do it in collaboration with our peoples. Otherwise, we will end up as we have in the past, failure. The decree can’t from on high. This matter has to be dealt with on the ground with our people.
Robin Gill: Okay. Phil Fontaine, thank you so much for your time
Up next, could releasing Meng Wanzhou have a dangerous effect on Canada’s international reputation? We’ll explore that question after the break. The West Block is broadcasting from Vancouver today. Stay with us.
Robin Gill: Welcome back. On Friday, Prime Minister Justin Trudeau announced Ottawa is suspending Canada’s extradition treaty with Hong Kong. It means Hong Kong residents facing extradition from Canada would not be sent back. The move is in response to China’s recent national security law for Hong Kong, which essentially brings what was once an autonomous city state under Beijing’s legal control and authority.
Prime Minister Justin Trudeau: “Canada joins the international community in expressing its grave concern with the passage of national security legislation for Hong Kong by mainland China. After studying the legislation and its impact, Canada will treat exports of sensitive goods to Hong Kong in the same way as those destined for mainland China. We are also suspending the Canada-Hong Kong extradition treaty and updating our travel advisory for Hong Kong.”
Robin Gill: Now this comes as tensions between China and Canada are at an all-time high over the arrest of Huawei executive Meng Wanzhou. She’s been detained in Vancouver, albeit able to live at one of two homes she owns in the city. She’s wanted in the United States, accused of misleading banks and violating sanctions against Iran. Soon after her arrest, two Canadian men: Michael Kovrig and Michael Spavor were arrested on so-called espionage charges. China has long insisted the arrests were not arbitrary.
To talk about this, we’re joined by Bonnie Glaser. She’s with the Centre for Strategic and International Studies in Washington, D.C. Bonnie, our prime minister has described this situation as hostage diplomacy so what are the options for our federal government?
Bonnie Glaser, Centre for Strategic and International Studies: Well, of course, Canada should continue quiet diplomacy, demands for better treatment of Michael Kovrig and Michael Spavor. This issue just has to remain at the top of Canada’s diplomatic agenda with Beijing. It just shouldn’t be business as usual. Canada should also redouble its efforts to forge a proactive coalition, condemning China’s illegal and arbitrary arrest of the two Michaels. Not all likeminded countries face a risk of having their citizens arbitrarily detained and democracies around the world should just be pressed to rally to the cause in support of justice and human rights. And then of course, a third option is to consider applying the Magnitsky sanctions against Chinese officials, who are responsible for the wrongful detention of Michael Kovrig and Michael Spavor. So, there are still options for Ottawa to continue to pursue.
Robin Gill: A lot of legal experts have weighed into this case and say Canada has the legal authority to set Meng free, but at what cost with the United States, especially with Donald Trump at the helm. He’s been very blatant about his disdain for our prime minister.
Bonnie Glaser, Centre for Strategic and International Studies: Well look, the Trump administration has dealt with this issue very poorly, especially President Trump, who at one point said he would intervene in the Meng case if it would help reach a trade deal with China. So that said, I think that Canada has an important reciprocal relationship with the United States, where each of course, undertakes to turn over people who have been accused to the other countries courts. And violating this arrangement would be damaging to Canada’s reputation. I think that the U.S. and other countries would likely view Canada as potentially untrustworthy and the resulting mistrust would persist regardless of the outcome of the presidential election in the United States in November. But, you know, I think that Meng was involved in a scheme that saw hundreds of millions of dollars flow illegally to Iran in violation of international sanctions. And China’s obviously tried to use hostage diplomacy to undermine international rules, and this is something that other countries should be willing to standby Canada with. And this is not something that Canada should deal with by itself and it should be on the front of everybody’s agenda.
Robin Gill: Will the U.S. give up on its fight with China and drop the charges against Meng?
Bonnie Glaser, Centre for Strategic and International Studies: Well, I can’t predict what President Trump is going to do, but the phase one deal is already signed. There is no possibility of a phase two deal being signed anywhere in the near future. I suspect that many officials in the Trump administration would oppose a deal in any case. And if Joe Biden is elected, I think the position of his administration would be more principled and more consistent.
Robin Gill: Have Canada’s allies abandoned us in this case, though?
Bonnie Glaser, Centre for Strategic and International Studies: Oh, no. Could the United States and other countries do more? Absolutely. But I don’t think that countries have abandoned Canada. I would side, for example, I think it was just two weeks ago, Secretary of State Pompeo issued a very strong statement, expressing extreme concern about the Chinese decision to formerly charge the two Canadian citizens. He referred to the charges as politically motivated and completely groundless, and said very clearly that the United States stands with Ottawa in calling on Beijing to immediately release the two Michaels. Pompeo also condemned Beijing’s restriction of consular access to them, in accordance with the Vienna Convention on consular relations. So I think that the United States is making strong statements, I hope, privately also putting this issue very much on the agenda. But if countries don’t do more in coordination, in concert with each other, then China can simply, you know, try to divide the—to drive wedges between them. China fears most of all, an anti-China coalition of—we’re seeing that form on issues like the COVID-19 pandemic. And this is another issue where countries should be working together more closely.
Robin Gill: Given the iron fist of this communist regime and conviction rates in China being 99 per cent, is there any hope of getting the two Michaels out sooner, rather than later?
Bonnie Glaser, Centre for Strategic and International Studies: We should not be pessimistic. We should leave no stone unturned in our efforts to get them to be released. This is not an issue where we should look backwards and judge Chinese record in past cases. We just have to work as hard as we possibly can to convince the PRC it is in its best interest. If it wants to be seen as a responsible, global player, it must release the two Michaels and stop arbitrarily arresting foreign citizens.
Robin Gill: Bonnie Glaser, thank you for your time.
Bonnie Glaser, Centre for Strategic and International Studies: Thank you.
Robin Gill: That is all the time we have for today. Thank you for joining us on The West Block from the West Coast. We’ll be back again next week, broadcasting from Vancouver and I hope to see you then. I’m Robin Gill. Until then, have a great week.