The federal government issued three big updates this week about Canada’s approaches to economic and public health policy for the COVID-19 recovery. On Wednesday, Finance Minister Chrystia Freeland delivered a virtual keynote speech to the Toronto Global Forum, and Bank of Canada Governor Tiff Macklem unveiled the central bank’s latest monetary policy report. Meanwhile, Chief Public Health Officer Dr. Theresa Tam delivered her annual report on the state of public health in Canada.

Policy watchers had been keeping a close eye on these developments to signal Canada’s policy priorities for the recovery, but there were mixed reactions on whether they went far enough in setting an agenda — including among the FPR team. FPR directors Karim Bardeesy and Matthew Mendelsohn share two different takes.

 

Karim Bardeesy: Without clear priorities, there’s no real plan

There’s something missing in this week’s trio of reports and speeches from Chrystia Freeland and Tiff Macklem, the lead economic policy-makers in Canada, and Dr. Theresa Tam, the chief public health officer. On their own, they are important pieces of work that sum up the current consensus in their areas, across many countries. But absent other political and policy leadership, they are not enough to guide future decision-making.

Freeland’s speech laid out the arguments for income supports for people and businesses, increased investments in health care, and high deficit spending in a low-interest-rate environment. Macklem’s report laid out the hows and whys of the Bank’s long-term low-interest-rate peg and its bond-buying program. And Tam’s report described the principles of the aggressive public health measures required to contain the virus, and described its disproportionate effects on different populations.

A good measure of policy-making is actually art, not science. That art comes from the confidence — economic or otherwise — that is generated by having a coherent mix of policies founded in evidence, and showing a longer-term commitment to them. That’s what a majority of the public, and those who interpret technical policy-making for the public, are looking for.

(Note that all three institutions — the federal Department of Finance, the Bank of Canada and the Public Health Agency of Canada — need to continue to make their work, and the concepts that guide them, more understandable to Canadians. This is a project we support through First Policy Response, and it’s good to see Freeland’s candour and plain-spokenness, and Macklem’s recognition of this challenge.)

But it’s not a real policy discussion to say that interest rates should be kept low for a long time, that we can rely on government borrowing and central bank intervention to sustain people and businesses, that the health system needs emergency investments, or that we will require some sort of fiscal anchor or plan to set limits on borrowing and/or stave off inflation. Nor is it controversial to observe that the health and other effects of the pandemic are being felt unequally across demographic groups, and that policy measures need to take this into account.

That’s not to underplay their efforts or observations. But the economic and public health debates have to be nested in a larger debate about the political and public-policy objectives during this fight. And for too long, too many policy leaders have preferred generalities to specifics.

Take the Bank’s statement that it “expects this growth to be uneven across sectors and choppy over time. Some parts of the economy will simply be unable to completely reopen until a vaccine is widely available, so sectors will recover at very different speeds.” Yes — but which sectors, at which pace? The risk the Bank has identified is real. Policy guidance could help to resolve it.

Charting a path to recovery will require trade-offs. It’s up to politicians and other leaders to more clearly identify those trade-offs, and to prioritize the most important outcomes in the short- to medium-term. Of course, politicians are loath to make specific prioritizations. They’d rather appeal to broadly-based shared sacrifice, or support for frontline workers, or a generalized desire to “flatten the curve.” But none of these generalized appeals can guide public policy enough. And crucially, that results in politically damaging and confrontational debates about edge cases: Why open malls and not gyms? Why gathering limits for stores but not schools? What should we do about Halloween?

We need to know what’s most important, in the eyes of our leaders, with more specifics. Is it supporting as much retail spending as possible, while attending to the most vulnerable populations and neighbourhoods? Is it to ensure that we don’t repeat the spring mistakes in long-term care, and making schools and childcare the last facilities to close? Is it to pay special attention to Main Street, or to artists, performers, trainers and others who make our cultural and physical lives fuller? 

It’s time for more public leadership around the specific trade-offs, and around what the endgame is with these trade-offs, on what kind of timeline. Just “trusting” public health officials and the emerging broad economic policy consensus is not a plan.

  

Matthew Mendelsohn: Leaving room for flexibility is the smart policy approach

Karim – dude! Why are you so negative? How can you say the government doesn’t have a plan? Sure, there are some details to work out, but the two major economic statements lay out a strategic direction for the government and the country: low interest rates for several years and continued significant deficit spending to support Canadians, businesses, organizations, communities and the transition to a carbon-neutral economy. It is pretty clear!

Yes, there is some vagueness about timing, but that seems appropriate: Why be specific about when programs will shut down until we know when vaccines will be widely available, and when we have no idea about the nature, pace and timing of economic recovery? I like the idea that the government is remaining flexible and will respond in real time to changing circumstances. That is how good public policy should be done.

And yes, some of the programs are still being worked out. The future of the Canada Recovery Benefit is still TBD and the details of some of the programs to accelerate transition to a low-carbon economy are not yet known. But again, that is the right thing to do.

I want the government to get the details for these programs right. I don’t think we should spend the next five years arguing about minutiae but I think the timelines so far have been reasonable. Talk to me again in six months. If we don’t have clarity by the spring, then I’ll be on Team Karim and co-sign your piece.

Now go get your kids ready for Halloween!

 

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Karim Bardeesy is Co-Founder and Executive Director of the Ryerson Leadership Lab and co-director of First Policy Response.

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Matthew Mendelsohn is Visiting Professor at Ryerson University and a co-creator, with the Ryerson Leadership Lab and the Brookfield Institute for Innovation + Entrepreneurship, of First Policy Response.