The fall economic statement tells us what economic recovery will cost - but not much else

Open this photo in gallery:

When we think about what we want to see from Ottawa in a plan for a postpandemic economic recovery, there are three basic requirements that must be satisfied.

We need a multi-year strategy for targeted programs and investments to rebuild the economy. We need an idea of what it’s going to cost. And we need a long-term plan for paying the bill.

In Monday’s mini-budget (or “fall economic statement,” as it is formally called), we got maybe halfway there. Maybe.

What (new) Finance Minister and (already) Deputy Prime Minister Chrystia Freeland gave us in Monday’s document was the “what will it cost” portion of the plan. Ottawa pledges to spend $70-billion to $100-billion over three years, starting in fiscal 2021-2022.

OK, it’s a range, not a firm target; the details will depend on how the pandemic goes over the next few months. But at least this provides a sense of how much stimulus Ottawa is prepared to unroll, and puts a time frame around it.

Given that this government hasn’t tabled a budget since the spring of 2019 – and that until now its COVID-related spending parameters have amounted to “whatever it takes for as long as it takes” – this is significant progress.

So, too, is the return of five-year budget projections, something that was conspicuously absent from the fiscal snapshot Ottawa presented in the summer. Spelling out those targets is a crucial positive step to re-establishing fiscal discipline – a major concern when we’re headed for a deficit approaching $400-billion this fiscal year. Whether the government maintains the discipline to stay on track with these projections is another question, but it’s an important start.

That leaves this government with the next four months - with a full budget likely coming in the spring – to make its decisions, figure out the details and be ready to hit the ground running. Taking the time to plan is all well and good, but we cannot afford a lot of dithering over this stimulus package.

There remains precious little indication of how the government intends to manage its deficits and the cost of its stimulus programs over time. It would appear that it’s banking on stimulating a recovery that will allow it to curtail spending as economic conditions improve, while simultaneously reviving revenues, without the need for substantive tax increases. This implies that the government expects its stimulus plan to be big enough and effective enough to grow our way back to more stable and sustainable government finances.

The stimulus package is clearly substantial, but not quite as impressive as the government makes it out to be. At an average of 1 to 1.3 per cent of GDP annually over three years, it’s on the same scale as the two-year, 2.5-per-cent-of-GDP stimulus plan that Stephen Harper’s government rolled out to fight the global financial crisis in 2009. That crisis was unquestionably on a smaller scale than this one. However, it should be remembered that this stimulus plan is in addition to the hundreds of billions the government has already poured into the economy; it’s already far along the stimulus path without taking the three-year recovery plan into account.

Speaking of “not taking into account,” the three-year stimulus package actually isn’t included in the government’s formal deficit projections – on the logic that the plans on how it will actually spend all that money haven’t yet been decided. Which serves to highlight the biggest hole in Monday’s stimulus reveal: all that money, and no plan on where and how to spend it.

Some priorities are pretty clear from the mini-budget, even if dollar figures won’t be assigned until the full budget in the spring. Green infrastructure investments are probably at the top of the list. A national child care plan is likely a close second.

On the other hand, little more than lip service (and some modest dollars) are directed to investing in education and retraining, accelerating the plan for nationwide broadband internet access and overhauling tax incentives to encourage private-sector innovation. All should be critical to any recovery stimulus. The document also contained no mention of removing interprovincial trade barriers - perhaps the most cost-effective initiative the government could undertake, in conjunction with the provinces, to stimulate economic growth.

We will have to wait until the spring budget to see an actual plan emerge to fill that $70-billion-to-$100-billion price tag, and there are lots of gaps to fill. But as we have seen over the past several years with Ottawa’s ambitious infrastructure-investment strategy, this government is not as efficient as it would like to be at putting its multibillion-dollar economic aspirations to work. In the post-COVID economy, we can’t afford slow and delayed roll-outs of stimulus while the government gets bogged down in meticulous planning.

If we hit next spring’s budget with the critical elements of this stimulus plan still under development, even $100-billion may prove too little and too late.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.