So far, the two front-runners in a race to stave off the first direct economic and political attack Canada has faced in our history as a nation have proposed … tax cuts and spending cuts.
Neither cut is what the nation needs most now, and neither will build the economic strength needed to defend our interests and sovereignty. Fiscal rectitude cannot address our biggest weaknesses. Instead, we can build resilience, trust and pride through government action — here’s a three-point plan to do so:
With 1.5 million Canadians currently unemployed and trade wars possibly adding a million more to their ranks, there’s no time to waste.
We are not recessionary ready. Although the federal government recently expanded access to its Employment Insurance Work-Sharing program, which helps avoid layoffs during business downturns by providing income support for those who work reduced hours, many companies won’t withstand tariffs for long. The end game for some American-owned facilities will be to close shop and move south.
Other businesses providing services or inputs to those companies will simply fold. Business bankruptcies are at rates last seen after the global financial crisis in 2009. The work-sharing program won’t work for businesses that no longer exist.
As well, only 35 per cent of Canada’s unemployed receive jobless benefits today, the lowest rate since the program began in 1941. The last time the majority of unemployed got EI was early in the 1990-91 recession, just before four rounds of cuts to eligibility introduced by both Conservatives and Liberals began.
Hourly requirements for eligibility to EI should be dropped to 360 hours. (In 1991, it was the equivalent of 300 hours for an area with six per cent unemployment. It’s 700 hours now). Boost the wage replacement rate to 66 per cent from 55 per cent of insurable earnings. Add a minimum benefit, because nobody can live on a fraction of the minimum wage. Increase maximum insurable earnings to ensure that well-paid skilled trades and assembly line workers aren’t forced to live on $36,000 (55 per cent of the current $65,700 maximum insurable rate), subsequently abandoning their mortgages. And we need to extend the duration of EI benefits. Today, benefits last from 14 to 45 weeks. The fallout from tariffs will likely last much longer.
Raise the floor, raise the ceiling and make EI last longer so it can do the job it was designed to do, acting as an automatic economic stabilizer to sustain purchasing power and prevent short-term economic downturns from turning into long-term crises.
Establish guardrails on foreign direct investment
The recent purchase of key ports in the Panama Canal by U.S.-based private equity giant BlackRock clarifies the meaning of economic war: Canada’s economy is overexposed to hostile takeover.
One U.S. dollar today purchases $1.44 in Canadian assets. Our businesses, commercial real estate, mineral rights and intellectual property are on fire-sale prices that will be further marked down by the uncertainty and reality of tariffs.
We publicly fund thousands of businesses to provide care — child care, physical and mental health care, home care and long-term care, dental care and pharmacare. In the U.S., private takeovers in the care sector drive up prices, erode quality and access, and degrade jobs.
Usually nations put brakes on capital outflows, preventing leakages of homegrown wealth. Today, the brakes need to be applied to prevent a surge in inflows of foreign capital. When businesses and lobbyists operate for foreign interests, sovereignty over consumer protections and public policies erodes just as surely as if our borders were breached.
In 2022, the federal government passed legislation to prohibit the purchase of residential housing by non-Canadians. It’s time for similar legislation, with much bigger penalties, to protect our businesses, resources and vital services.
Sell victory bonds
Continuous threats from the U.S. have produced an “elbows up” moment, creating a unifying spirit unlike anything felt since the Second World War.
Let’s harness that energy and create a “wartime” funding mechanism: victory bonds. While Canadian household debt may be near record highs, the household savings rate is at its highest level in a generation.
Just like in the First and Second World wars, plenty of Canadians would buy the bonds in denominations from $50 to $10,000, for five-, 10- and 15-year periods, with guaranteed returns of five per cent.
We may have the best federal fiscal situation of all G7 nations, but an infusion of cash could fund desperately needed spending in the public interest. It could speed government procurement to reshape supply chains so we are less reliant on the U.S.; address the housing crisis that threatens to escalate as unemployment accelerates; and deal seriously with the chronic shortage in publicly funded care with which Canadians are grappling.
Keep your money safe in a time of uncertainty. Build a stronger Canada when we need it. What’s not to love?
Let’s fight like we actually want to win.
