Support for lower-income households
Many lower to middle-income households could also face a liquidity crunch in the short term. Social distancing may disproportionately impact lower-income households. Some economists have called for “supersizing” existing rebate programs such as Canada Child Benefit and/or the GST/HST Rebate as an effective way to provide lower-income Canadians support to address lost wages in the short term. These measures and others like them leverage existing programs, target lower-income households and are therefore more likely to be spent in the economy. These measure could also benefit Canadians working in the growing gig economy.
Targeted support for Alberta and other provinces dependent on oil exports
Oil prices have collapsed not just because of COVID-19, but also because of the recent price war between Saudi Arabia and the Soviet Union. Alberta is facing an unemployment rate that is nearly two percentage points above the national average. COVID-19 and the Saudi-Russian dispute could not have come at a worse time for the Alberta economy and there is no question that additional levels of support will be required to help stabilize Alberta’s economy in the short term and likely on a longer-term basis.
New infrastructure stimulus program
We acknowledge that infrastructure spending takes time to work its way throughout the economy, but prior to the outbreak of COVID-19 Canada was already facing lower growth prospects, decreasing investment and a large and growing infrastructure deficit, which is harming productivity levels. Remitting a higher proportion of the gas tax to municipalities could help various municipal infrastructure projects to progress and increase demand. If managed appropriately, increased infrastructure spending could also address some of our longer-term challenges. Indeed, one approach that should be considered is whether existing infrastructure projects could be accelerated through an increase in funding. It will important to invest in projects that are not just “shovel ready” but those that are “shovel worthy” to improve Canada’s lagging productivity.