Economic recovery will require a policy oriented toward balancing the budget, expert says
Concerns over the governments ability to balance the books once the pandemic is over have been exacerbated by the extension of the Canada Emergency Response Benefit (CERB) for another two months.
Experts are saying the government needs to come up with a way to balance providing aid to those who need it with working toward reducing costs—and therefore borrowing—as much as possible.
The Fraser Institutes Jason Clemens has done the math, and says the costs could be dire depending on how policies are implemented going forward.
“We dont have a clear estimate of the additional costs since the federal government hasnt provided a fiscal update or a budget,” he tells the Epoch Times.
“[The Parliamentary Budget Officer] is reporting a net cost of CERB at $53.4 million before the extension. The peak monthly cost is reported at a little over $17 billion but theres been a clear reduction as workers moved to the Canada Wage Emergency Subsidy. Were clearly talking about more than $20 billion, though, for the eight-week extension.”
Announcing the CERB extension last week, Prime Minister Justin Trudeau explained that although the economy is slowly opening up, there are still people who wont be able to go back to work for a while longer, and that the number of people willing to go back to work is disproportionate to actual job availability.
The initial 16-week CERB payment period was set to end July 4. The extension means payments of $2,000 a month will continue into early September. Employees who make more than $1,000 a month are no longer eligible for the benefit.
In its report on estimated spending for 2020, a group of experts at the Fraser Institute note that per-person spending could reach “an estimated $13,226 in 2020, by far the highest level in the history of the country.” Economist Jack Mintz wrote in an op-ed last month that if spending is to continue as it has been, the debt burden could balloon to $3.2 trillion.
According to data from Statistics Canada, net debt as of March 2019 was approximately $768 billion.
Clemens says it must be recognized that current circumstances have been adversely affected by the state of federal finances pre-pandemic, and that a proper recovery will require a policy oriented toward balancing the budget.
As this relates to CERB, he says more targeted assistance is crucial to mitigating costs, and this might mean being stricter as to who is eligible for the benefit.
“[One] example is the lack of household income as a filter for CERB eligibility. It means a significant number of school-aged children (under 24 years of age) living with their parents in households with reasonable income are eligible for CERB,” he says.
“Should CERB cover households with an income over $100,000 when the applicant is 21 and in school full time? Indeed, there are a surprising number of young people in this category whose monthly income has actually increased markedly under CERB. That doesnt strike me as a wRead More – Source