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The COVID-19 recession is over. Will Canadians start spending?

News

Welcome to The Hub’s Federal Election 2021 Policy Pulse, where we’ll be tracking all the policy announcements from the major parties, with instant analysis from our crew of experts.

With the election scheduled for Sept. 20, we’ll be monitoring 36 days worth of policy ideas, so watch out each morning for the day’s live blog where we’ll be tracking every announcement as it happens.

5:00 p.m. — Daily recap: Erin O’Toole wants to ban puppy mills

The Conservatives went after puppy mills, the Liberals promised to protect lakes and rivers and the NDP wants to make life hard for “the ultra-rich.” Here’s the rundown, with more news and analysis below. Visit the Day 16 live blog for our full day of content.

  • Conservative leader Erin O’Toole was in King City, Ontario to announce a plan to ban puppy mills, crack down on breeders and dealers who lie about “rescue pets,” and a ban on the importation of inhumanely bred animals.
  • Liberal leader Justin Trudeau was in Granby, Quebec promising to spend $1 billion over ten years to restore and protect large lakes and river systems. 
  • NDP leader Jagmeet Singh was in Ottawa this morning promising to spend $100 million to increase enforcement at the Canada Revenue Agency.

4:00 p.m. — The COVID-19 recession is over. Will Canadians start spending?

The Hub’s content editor L. Graeme Smith looks at the GDP numbers expected tomorrow:

Canada’s COVID-19 recession is over, declares the C.D. Howe Institute’s Business Cycle Council.

Now that the country is experiencing broad economic growth and showing signs of sustained recovery, any future persistent economic downturn should be considered a new recession, a recent publication from the institute states.

This downturn was the shortest and deepest since the Great Depression, but both real GDP and total employment are stronger today than they were in December 2020 (though they are yet to recover to February 2020 levels).

The latest economic snapshot remains to be seen. Statistics Canada is set to release its next major economic report, the 2021 second quarter gross domestic product, income and expenditure report, tomorrow at 8:30 a.m. EST.

The previous report showed a 1.4 percent increase in Canada’s real GDP in the first quarter of 2021, which followed increases of 9.1 percent in the third quarter and 2.2 percent in the fourth quarter of 2020.

The Bank of Canada’s Monetary Policy Report from July 2021 states that economic activity in the first half of 2021 has been somewhat less robust than expected because a combination of softer housing activity, supply chain issues, and the impact of containment weighed more on growth than was anticipated.

With reopening expected to accelerate, the report does project the economy to grow at a pace of around 6 percent in 2021 before moderating to about 4.5 and 3.25 percent in 2022 and 2023, respectively.

Underpinning this growth will be strong increased consumption — households are expected to be less cautious and assumed to spend 20 percent of the extra savings they accumulated during the pandemic, according to the report.

As for cost of living, a prominent concern of Canadians as exclusive new polling for The Hub shows, inflation will likely remain at or above 3 percent through the rest of 2021 due to pandemic-related factors, the report states. This is expected to ease and level off to about 2 percent in 2022, before rising temporarily — to modestly above 2 percent in 2023 — before returning toward target in 2024.

3:15 p.m. — Party leaders get their first French tests on Radio-Canada

Antonia Maioni, a professor at McGill University, reports on the leaders’ ‘dress rehearsal’ for the French-language debate:

Last night, Radio-Canada aired a series of “tête-à-tête” interviews with the federal party leaders. Part canned conversation, part dress rehearsal for the upcoming French-language debate, the party leaders were asked a series of questions from a trio of familiar journalists on the principal issues in the election campaign so far.   

For Conservative leader Erin O’Toole, this was a first introduction to the francophone viewing public. His challenge was twofold: to put to rest the bogeyman image that had been vehicled against his predecessors – on the environment and abortion, for example – and to get across his message about provincial autonomy and fiscal stability.  But this was also an image exercise, to show his facility in French and to come across as an engaged everyman. Will Quebec voters see him as the next “bon vieux Jack” who rode that wave in 2011? Probably not, but there is a certain authenticity that came through the camera that could bode well for the rest of the campaign. 

Speaking of which, Jagmeet Singh also had a good showing on the image side. He was personable and confident, his French showing marked improvement. The NDP message that resonates with certain Quebec voters was there, and clearly expressed, but it’s hard to imagine that it will could lead any significant improvement in the party’s fortunes this time around. A similar impression emanated from the interview with Anneamie Paul, with two added caveats: the internal strife in her party, and the absence of a Quebec-specific message.  

In the conversation with Yves-Francois Blanchet, the Bloc Québécois was put in the curious position of defending his party from being a “front” for the provincial government and premier François Legault. Why this would be an issue for a federal election remains to be seen, but Blanchet showed it wasn’t the provincial CAQ but rather the federal Conservatives that were of real concern. He knows the BQ will be in for a fight for Quebec City and suburban Montreal voters, and that he is walking a fine line between trying to attract them away from the Conservatives while at the same time leaving open a crucial role for the BQ should a new minority government emerge. 

As for Justin Trudeau, there was the sense of a certain “fatigue” factor, which is understandable given this is his third campaign.  But, strangely enough, it did not emanate from the Liberal leader, who was as chirpy and confident as usual, but from the journalists in the interview. The exasperation was palpable. They tried everything from needling him on election timing to taking him to task for the Governor-General appointment. The Prime Minster was smooth and suave but the questions revealed some important challenges in the Liberal platform, on the deficit, language and provincial autonomy, that are top of mind for many Quebec voters this time around. 

2:15 p.m. — Canada gets low grades on animal welfare, but polling shows people want improvements

The Hub’s content editor L. Graeme Smith looks at how Canada fares when it comes to animal welfare:

This morning, Conservative leader Erin O’Toole outlined several policies that the party would enact to increase animal welfare in Canada. 

Bolstering Canada’s laws in this regard is welcome news to advocates and organizations critical of the country’s current legislative protections, such as the World Animal Protection

Last year the global charity released an update to its Animal Protection Index, which assesses fifty countries around the world and grades the number and strength of their animal protection policies and welfare laws. The highest grade is A and the lowest is G.

Canada received a failing grade of D, receiving low marks for not having adequate legislation protecting wildlife in captivity, working animals, farm animals, animals used in research, and companion animals.

As The Hub contributor Dean Tester pointed out in his analysis for Policy Pulse last week, the Conservative proposals largely ignore the domestic animal agriculture industry. Their commitments would be strengthened if they included legislation that improved conditions for farmed animals as well, he writes, despite the industry backlash this may induce. 

Overall, though, the promises to bolster animal welfare laws seem to be aligned with popular sentiment, as the World Animal Protection cites a 2019 omnibus poll conducted by Maru/Blue that shows 73 percent of Canadians believe it is important that the government of Canada passes stronger legislation to protect animals.

1:00 p.m. — Nearly half of Canadians think we spent too much battling the pandemic

We’ve got exclusive polling about the issues on the minds of Canadians as we near the halfway mark of the campaign. For one thing, people are more concerned about public finances than the conventional wisdom might suggest:

Seventy-three percent of Canadians are concerned about the levels of debt being piled up by the federal government as it fights the COVID-19 pandemic, according to exclusive polling conducted for The Hub by Public Square Research and Maru/Blue.

Nearly half of Canadians fear the government spent more money than was necessary to battle the COVID-19 pandemic and only 10 percent believe the government didn’t spend enough. Forty-eight percent said the government spent too much, with 42 percent saying spending was just right and 10 percent saying not enough was spent.

Read the whole piece here.

11:40 a.m. — With ‘affordability’ on the minds of Canadians, the leaders may have to think about monetary policy

The Hub’s editor-at-large Sean Speer examines the role of monetary policy in the campaign:

Late last week, U.S. Federal Reserve chair, Jerome Powell, gave a major speech on the bank’s monetary policy including his views on the risks of sustained high inflation.

In basic terms, Powell downplayed the risks of sustained inflation rates above the 2-percent target. While he acknowledged that current inflation rates are “a cause for concern,” he argued that they are “temporary” and expressed confidence that the bank will eventually restore 2-percent inflation “on a sustainable basis.”

Commentary on Powell’s speech was mixed though critics warned that he was understating inflation risks. Jason Furman, President Obama’s former chief economic adviser, for instance, argued that Powell was “failing to take seriously any arguments on the other side.”

Federal Reserve policy will have major implications for Canada’s economy including the extent to which it informs and shapes the Bank of Canada’s own approach.

In the context of the federal election campaign, the Bank’s inflation targeting framework has already received unexpected attention. Conservative Party leader Erin O’Toole, for instance, has committed to renewing the Bank’s current mandate if the party is elected.

Given new polling for The Hub that shows Canadians are concerned about “affordability” is a top 5 issue (particularly for Canadians aged between 18 and 34), we can anticipate that issues concerning interest rates, inflation, and overall monetary policy may loom larger than in typical elections.

For Hub readers interested in these issues and what they may mean for Canada’s economy, you might want to check out:

  • Robert Asselin, “Big questions remain as the central banks look for balance on inflation,” The Hub, June 9, 2021. Available here.
  • Rudyard Griffiths, “The leaders won’t be talking about this issue. It may be the most important one,” The Hub, August 16, 2021. Available here.

11:15 a.m. — O’Toole promises to ban puppy mills

Conservative leader Erin O’Toole was in King City, Ontario to announce a plan to ban puppy mills, crack down on breeders and dealers who lie about “rescue pets,” and a ban on the importation of inhumanely bred animals.

The Hub covered the Conservative animal welfare last week on National Dog Day. Check out the post for a full list of policies the party is promising.

9:40 a.m. — Trudeau promises $1B to protect lakes and rivers

Liberal leader Justin Trudeau was in Granby, Quebec promising to spend $1 billion over ten years to restore and protect large lakes and river systems.

Trudeau also promised to modernize the Canada Water Act, to “better address climate and Indigenous waters.” The Liberal plan also calls for a Canada Water Agency to protect and manage Canada’s freshwater.

9:30 a.m. — Singh promises to clamp down on tax evasion with increased enforcement at the CRA

NDP leader Jagmeet Singh was in Ottawa this morning promising to spend $100 million to increase enforcement at the Canada Revenue Agency.

Singh estimated that it would raise $25 billion in revenue by “going after unfair stock options, increasing public reporting on corporate taxes and strengthening enforcement.”

7:00 a.m. — Where the leaders are today

Liberal leader Justin Trudeau will make an announcement at 8:30 a.m. in Granby, Quebec.

Conservative leader Erin O’Toole will be in King City, Ontario at 11 a.m. to make an announcement.

NDP leader Jagmeet Singh will be in Ottawa to make an announcement at 9:30 a.m.

Trudeau pledges rebates for zero emission vehicles

News

Welcome to The Hub’s Federal Election 2021 Policy Pulse, where we’ll be tracking all the policy announcements from the major parties, with instant analysis from our crew of experts.

With the election scheduled for Sept. 20, we’ll be monitoring 36 days worth of policy ideas, so watch out each morning for the day’s live blog where we’ll be tracking every announcement as it happens.

Sunday

Liberal leader Justin Trudeau was in Cambridge, Ontario, to make an announcement about battling climate change, including a $5,000 rebate on zero emission vehicles.

Conservative leader Erin O’Toole was in Saint-Hyacinthe, Quebec on Sunday to pledge a 25 percent tax break for people who invest up to $100,000 in a small business over the next two years. O’Toole also highlighted a plan for loans up to $200,000 to small and medium-sized businesses.