Finance Minister Bill Morneau said he will take a “practical and prudent” approach to the upcoming federal budget in the face of the COVID-19 virus, while assuring that the government has the “fiscal firepower” to respond to the economic fallout from the outbreak.
Speaking to a business audience in Toronto, Mr. Morneau didn’t provide any details of any stimulus measures the government might be pondering. He did say that the budget would set aside a larger-than-usual “risk adjustment provision” – the funds set aside in each budget as a contingency for unforeseen events – “to ensure that we are ready and able to respond.”
“We will be judicious and responsible in how we make investments in this budget, while continuing to show confidence in the economy that Canadians have built. Our approach will be practical and prudent, but squarely focused on making progress on the things that matter to Canadians,” he said.
“The emerging challenges that I’ve outlined today show us why we will continue to preserve the fiscal firepower that allows the government to protect Canada from risks today and tomorrow.” “We have and continue to base our fiscal policy on a gradual reduction in the debt in relation to the size of the economy.”
Mr. Morneau also said support for Canadians quarantined as a result of the virus will be announced shortly.
“The first step, in the immediate term, will be to ensure that our federal public health capability to respond continues to be world class. We will soon be announcing support for Canadians who would have to be quarantined in order to prevent the spread of the virus,” Mr. Morneau said.
“As a second step, we will continue to monitor the impact on businesses and workers. We have the tools to respond quickly.”
He stressed that the federal balance sheet is strong, giving the government the flexibility to respond as the impact of the virus evolves.
“You have a great balance sheet because sometimes there are rainy days,” he said. “It’s a rainy day.”
The government’s fiscal projections currently include a $3-billion per year adjustment for risk to cover unforeseen spending or economic changes. In December, the government lowered its adjustment for the current fiscal year to $1.5-billion, accounting for the fact that more than half of the fiscal year had passed.
Mr. Morneau added he has been speaking frequently in the past week to all the heads of Canada’s big banks, to discuss the financial issues surrounding the virus impact.
Mr. Morneau reaffirmed the government’s commitment to its carbon plan as a cornerstone to its longer-term economic strategy.
“We need to position Canada as a global leader,” he said. “We need to position Canada as a global leader. Canadian businesses already know that, adopting better practices and exploring the new opportunities of a green economy will lead to success.”
“We have to work with the sectors of our economy that are heavy carbon emitters. There is no path forward for Canadian businesses that doesn’t include reducing their carbon emissions – investors just won’t be there.”
With a file from Bill Curry in Ottawa
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