Ottawa (26 Aug. 2021) — A report released today by the Canadian Centre for Policy Alternatives (CCPA) shows that the federal government contributed 86% of the cost of the measures to respond to the COVID-19 pandemic. The report, Still Picking Up the Tab: Federal and provincial government COVID-19 spending, updates a previous report on spending during that pandemic, Picking Up the Tab, which the CCPA released in January.
The fiscal capacity of the federal government means that it has an important role to play in funding key public services, even outside of a pandemic. During a pandemic or other crises, the federal government’s role in funding the services and supports Canadians need becomes all the more important. However, when the federal government is paying 86% of the cost of responding to the pandemic, provincial governments attempting to use the pandemic to justify cuts to public services are playing games.
“With the federal government shouldering most of the costs of this pandemic, even in areas like health care, there is no room for provincial austerity in the years ahead,” said David Macdonald, CCPA Senior Economist.
Payments to businesses the largest cost
The largest single expenditure related to the pandemic was payments to businesses. $176 billion was spent on measures such as the Canada Emergency Wage Subsidy to assist businesses to keep or hire workers. This is more than 2.5 times as much as what is being spent on health care.
People recognized that we had to help out businesses that were suffering as a result of restrictions and consequences during the pandemic. But just as we all helped out businesses during the pandemic, businesses that are doing well need to do their share in helping pay for costs related to the pandemic.
After the 2008 crash, banks accepted bailouts from governments, including some banks in Canada. Then, the same people who benefited from the bank bailouts turned around and demanded austerity policies that forced low- and middle-income people to pay for the deficits created by the bank bailouts.
If business lobby groups try to repeat that hypocritical behaviour, they need to be reminded that support for businesses is the biggest single cause of increases in government debt levels due to the pandemic.
Several provinces still sitting on unspent funds
While the problem of provinces sitting on unspent funds that could be used to help people get through the pandemic isn’t as severe as it was in January, it is still a concern in some provinces. Even though those funds are needed to reduce the impact of the pandemic, the feat is that unallocated funds will remain unspent.
Alberta has increased its unallocated funds from $750 million in January to $1.77 billion. Relative to its size, Prince Edward Island has a substantial amount of money that is unallocated, with most of the unallocated funds being federal COVID-19 transfers intended to assist with health, education, and child care.
"During the pandemic provincial politicians were falling over themselves to praise public sector workers who were on the front-lines," said Larry Brown, President of the National Union of Public and General Employees (NUPGE). "If they were sincere, they should acknowledge that federal funding for pandemic-related measures means that provincial budgets weren't as impacted and that attacks on public sector workers aren’t necessary."
Funds to support low-wage essential workers not being used
The report also found that not all provinces are using federal support intended to assist low-wage essential workers. Saskatchewan has yet to spend $63 million of the $103 million in available federal funds. Given that low-wage essential workers have been forced to take risks and face difficult conditions during the pandemic, it seems incredible that governments would be so ungrateful as to not use funding available to support them.