Canada’s economy has taken a battering from the pandemic and the recession that followed. Although Canada has done better than other countries, the economy can expect turbulence for the foreseeable future.
Both the Prime Minister and the Finance Minister have publicly indicated that spending on an economic recovery is coming, and it will focus on investing in a greener, more inclusive future. Balancing these two goals is important, but not easy. The key is to take time before spending gets underway to identify where areas of overlap exist, then target them in a recovery package.
Although this pandemic has hit all Canadians, it has not impacted them evenly. Over the last three months, as many have begun to return to work, troubling trends have emerged for the hardest hit groups. Women, racialized Canadians, youth, and persons with disabilities are experiencing above average unemployment and slower returns to work than other groups.
This inequitable burden means that, far from a purely political project, an inclusive recovery is actually smart economics. In a recession, the quickest path back to growth is for unemployed workers to return to work. Many members of these communities faced barriers to participating equally in the workforce before the pandemic. These have been exacerbated in recent months, and will limit their ability to rejoin the workforce moving forward. Spending to advance inclusivity can help overcome these barriers and resurrect growth in a way that benefits all Canadians, which has been discussed extensively by a number of organizations across Canada.
Much like inequity imposes costs on Canadians, so do the impacts of climate change. The wildfires that raged through Australia earlier this year, and that are currently devastating California, are only the latest evidence of this. Meeting our national climate targets should be a top priority to avoid paying the steepest costs brought on by a warming world.
A smart economic recovery can do both: it can lower the barriers to entry for those hit hardest by a pandemic, and invest in a cleaner future where Canada continues to prosper. Recent analysis by Smart Prosperity outlines a five-step approach for doing this.
First, governments need to remember that the turbulent climb to a new normal will take time. The current rebound the economy is experiencing may yet turn into a downturn if another lockdown occurs. A spending package that rolls out tomorrow could also inadvertently lead to another outbreak if it brings people together too quickly. This is unfortunate, but it does give policymakers some breathing room in the midst of this ongoing crisis to think about how they want to approach addressing these structural objectives of growth, green and inclusion.
Second, governments need to think about the big picture questions: How do they want to support sustainability and inclusivity? And what goals are they setting and working towards? There is no good justification why any community in Canada should lack access to clean drinking water, health care or a safe work environment in 2020. Any of these, and a host of others, would be worthy goals to advance.
Third, in order to ensure progress is being made towards achieving selected targets, governments should collect data about each objective they set. Using this data, governments can then direct spending towards the areas where goals are furthest away from being met. This helps make spending more strategic, and supports communities where they need it most.
Fourth, governments need to do a better job accounting for the benefits of policies that improve people’s lives. Spending on green projects offers a host of benefits to the physical and mental health of people everywhere. One good example is that switching to electric school buses can reduce children’s exposure to harmful air pollutants. Those benefits matter more than before the pandemic.
Fifth, governments need to take steps to remove the barriers that prevent all groups from rejoining the workforce equally. The first is understanding what those barriers are, which leading organizations have been looking at for years, which should then be followed by creating a plan to help individuals overcome them.
Implementing these five steps should begin in advance of recovery spending. They will set the goals, identify target projects, create the accounting frameworks, and remove the barriers that will shape where spending goes. The climb back to a better normal offers governments the chance to advance these areas.
Mike Moffatt is an assistant professor at the Ivey Business School at Western University and Senior Director at the Smart Prosperity Institute. John McNally is a research associate at Smart Prosperity.