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Record federal deficit of $343B doesn't mean B.C. should panic: economist

Last Updated Jul 8, 2020 at 5:47 pm PDT

FILE: The Peace Tower on Parliament Hill in Ottawa on Tuesday, May 29, 2018. THE CANADIAN PRESS/Sean Kilpatrick
Summary

Despite a projected deficit of $343.2 billion, one economist says there's no reason to freak out, and there's benefits

Lindsay Tedds says the pandemic has led to government funding to bolster childcare in B.C.

VANCOUVER (NEWS 1130) — With a projected federal deficit of about $343.2 billion for this fiscal year, one economist says Canada’s financial picture doesn’t mean B.C. should panic, and there might even be some good news.

Lindsay Tedds says past recessions have taught austerity and cuts are not the path back to fiscal health, so she doesn’t think provincial infrastructure projects are at risk of losing federal support.

“Should people be freaked out about this? Well, I’d be more freaked out if the government hadn’t done anything to support us all through the pandemic.”

RELATED: COVID-19 pandemic pushes federal deficit projection to record $343B

Tedds says a silver lining to the current public health crisis is the federal government is making good on billions to bolster childcare, including in B.C.

She says childcare support is crucial to getting people and the province back on solid financial footing

“There is no knee-jerk reaction for austerity – cutting services cutting out transfers to the provinces – we are nowhere near that.”

But this recession is not like other ones seen before, Tedds says, so it will need a recovery that hasn’t been seen before too.

“It’s affected women much more than men and we have to rethink the shovel in the ground kind of idea of how we recover from recession those kinds of projects don’t benefit those hit the hardest.”

She says traditional recession recovery shovel in-ground projects should be alright too.

This massive amount of red ink in the projected update is largely because of the decline of the economy and the direct emergency measures introduced to help Canadians and businesses weather the COVID-19 pandemic. Emergency assistance brought in over the past four months include the federal government’s wage subsidy and Canada Emergency Response Benefit, programs which total $212 billion.

This means the COVID-19 pandemic has pushed the government’s debt from $765 billion as of March 2020 to an expected $1.2 trillion by March 2021.

-With files from Cormac Mac Sweeney