Canada’s Foggy Economic and Fiscal Future

The pandemic has highlighted and amplified the economic, social and health vulnerability of many Canadians. There is much that should be done. But how much can be tackled without risking large costs in the future? And what are the most effective and efficient approaches? Canadians should weigh in on such questions before the federal government decides on future policy. I lay out four scenarios for Canada’s fiscal future. Each scenario targets a deficit and debt track into the 2030s. Among the takeaways: Restoring and then maintaining fiscal stability as defined by most, calls for some degree of fiscal restraint once the pandemic subsides. Such restraint could be a combination of curtailing program spending or increasing taxation; the latter option is not examined here as the government has indicated that, with minor exceptions, it does not intend to increase the tax burden. The expensive initiatives set out in the Speech from the Throne cannot be fully implemented within the bounds of any reasonable definition of a fiscal anchor