On July 8th our Finance Minister, Bill Morneau, formally announced that the federal government deficit for the 2020 -21 fiscal year will be $343 billion. The same Minister also announced his most recent estimate for the 2020-21 federal budget had called for a $34 billion deficit.
We are all well aware of the cause of the increase and for the most part, the majority of us support the actions our federal government has taken. The SARS-CoVid 19 virus has wreaked havoc on the Government of Canada’s fiscal position, and also on the fiscal position of many of the world’s countries. In Canada, the stimulus packages necessary to support our workers, our businesses, our employees and our other vulnerable citizens have in one fell swoop destroyed decades of somewhat prudent fiscal management by the federal government. Net federal government debt which was $765 billion will now be $1,200 billion, an increase of 36%. By any measure, the one year increase in net federal debt announced today is unprecedented in our country’s history.
All of this was undertaken in an effort to save our nation from financial collapse, potentially years of economic depression and to rescue our most vulnerable citizens. While some may debate the fiscal prescription we have taken, the medical solution to the CoVid crisis has always been well known. We need a vaccine, we require better treatment procedures, and we have to install much better public health control measures. Canada and the world are responding to these needs and there is a hopeful consensus that CoVid will be solved or at least become managed.
However, in the immediate future and indeed at this very moment, we all face a more daunting challenge. Climate change is heating our world and the consequences are frightening – glaciers are melting, coastal cities are flooding, forests are burning and the lives and livelihoods of hundreds of millions of humans are at risk. As with the CoVid crisis, the solution to climate change is well known. Simply put we must significantly reduce the amount of CO2 we are pumping into the atmosphere. To address this crisis our governments, need to attack it with the same unwavering commitment and international cooperation that has proven to be effective throughout the CoVid pandemic.
There are three major impediments preventing our politicians from taking action to control CO2 emissions and halt further climate damage – a historical lack of public support, a political dawdle and now because of CoVid, fiscal fatigue.
The first issue is a lack of support by the population for the perceived dramatic changes which are believed to be necessary. While environmental concerns regularly rank near the top of public opinion polls, they rarely top the list. Most frequently, other deserving issues outrank the environment – CoVid, BLM, the economy, taxes and political trust. However, the will of the population is shifting. How many of us have heard during our CoVid discussions “I hope we will emerge from this crisis with a different economic/social order”? Influential heavyweights including the IMF, the EU, the Church of England, the international press and Greta Thunberg have all weighed in urging our politicians to adopt drastic steps to curb CO2 emissions. In Canada, the Corporate Knights, representing the collective thoughts of 100 of Canada’s business leaders, have recently issued a white paper addressed to the federal government, outlining what steps Canadian business can contribute to help address this crisis.
Still our politicians dawdle. This is the second impediment our society faces when addressing climate change. Professor J. Purdy of Duke University, believes that despite increasing public awareness and support the political inability to act remains. He says political decisions are the product of the architecture of the processes we have put into place – courts, committees, legislature, polls, elections and potential campaign success. All must be managed or coerced into alignment to address the gap between what humanity must do and what our politicians are willing to do to accomplish that. The gap between the two is a daunting task for any politician to negotiate. There are however, historical precedents where politicians have stepped up and bridged similar gaps. We are again in a situation that requires great political leadership to step up. It hasn’t happened yet, but it needs to soon.
The third impediment is perhaps the most challenging. Fiscal fatigue is the reluctance of our politicians and the public to willingly assume more public debt. Fiscal fatigue is poised to become the newest consequence of CoVid. As a result, we shouldn’t be surprised to witness an increased reluctance by our politicians to develop and implement policies that will address climate change simply because they might have to paid for by issuing more debt.
This issue will not be unique to Canada. At the same time that the world requires a huge investment to develop, implement and monitor policies to address climate change, most governments will become hesitant for fiscal reasons. The issue is dire because we are time constrained by the need to do something to address climate change now.
What can we do? The first thing to do is to write a letter to your MPs, your MLAs and your municipal council. Tell them you support all their initiatives to halt climate change. Ask your friends to do the same. We cannot allow the climate issue to be pushed aside.
Ask them to consider the possibility of tying the CoVid emergency relief payments or obligations for repayment to climate change initiatives by the recipients, thereby reducing fiscal fatigue. Payments to and the obligations for repayment that are made under these programs could be made more attractive for those individuals, lower level of governments and businesses that commit to initiatives that will reduce their CO2 emissions. Unlike most existing federal transfers which are considered established programs the CoVId payments are completely discretionary. They were initially proposed to help avoid the economic consequences of CoVid but there is no reason they could not be made to simultaneously stir our economic participants to CO2 reducing initiatives.
We need our business leaders to begin investing in CO2 friendly initiatives. Canada’s Corporate Knights have shown there is a world of business opportunities that can be positive initiatives to our economy. Encouragement has to be given to those initiatives.
Finally, we need to remind our politicians, the country and each other that CO2 reducing policies and programs won’t necessarily be a drain on the economy at the end of the day. Rather we should recognize the very real possibility that new businesses and revisions to existing business processes designed to reduce or eliminate carbon consumption and production will produce opportunity and wealth. Since the 1850’s all of the western world’s great wealth generating eras have resulted from significant technological change – the industrial revolution, the car, the invention of the production line, the unfortunate development of plastics, the computer, the internet. Climate change initiatives can have the same result. We need to have our population see climate change initiatives as a good thing and if successfully implemented we would all be on the winning side of the equation.
Keep Safe
Doug Crocker
Holland Centre
