Madam Speaker, I am pleased to contribute to the debate on the motion before us today.
I will start by acknowledging that it has been a very difficult year for all Canadians. Everyone has been affected by this pandemic in some way or another. In Newmarket—Aurora, we have shared in the suffering from the loss of life, fears for the future, the impact on mental health, the loneliness, and the challenges faced by small businesses, their owners and employees.
Let me assure all Canadians that the government remains committed to doing whatever it takes to help Canadians and Canadian businesses survive through this crisis.
To quote Martin Luther King Jr., “The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.”
From day one, this government has been there with a comprehensive and fiscally responsible support package to help Canadians and businesses of all sizes weather the COVID-19 pandemic. Fortunately, we have been able to respond from a position of strength. Canada entered this crisis in a strong fiscal position, allowing the government to take decisive action to provide the support that was needed to weather this storm.
We started with a low debt position and have been able to maintain that advantage relative to our peers, and with historically low debt servicing costs, the government has been able to afford to take on debt so that Canadians do not have to. Federal debt servicing costs relative to the size of our economy are at a 100-year low, and we are locking in these low costs by issuing more debt in longer-term instruments at historically low rates.
The federal government has provided more than eight out of every 10 dollars spent in Canada to fight COVID-19 and support Canadians. These investments represent Canada's largest financial response since the Second World War. The International Monetary Fund in its recent staff report for the 2021 article IV consultation estimates that without Canada's COVID-19 economic response plan, real output would have declined by an additional 7.8% in 2020 and the unemployment rate would have been 3.2% higher. By providing Canadian businesses and families a financial lifeline to pull them through the crisis, the government has helped Canada avoid widespread business and personal bankruptcies and the possible negative impact of that for generations of Canadians.
However, it is not just support programs that the government has deployed. In fact, the very first thing the government and its partners did at the start of the crisis was to make sure that businesses had access to credit. Indeed, the first coordinated package of measures supported financial sector liquidity, the functioning of markets and continued access to financing for Canadian businesses. This included the business credit availability program in which the Business Development Bank of Canada and Export Development Canada have co-operated with private sector lenders to make financing and credit insurance available to Canadian business.
An important part of the program is the Canada emergency business account, which provides small businesses with access to interest-free loans of up to $60,000, one-third of which is forgivable if repaid by December 31, 2020. After listening to Canadian business owners, the government modified or expanded the program several times, making it available to self-employed business owners and also increasing the maximum loan by $20,000. As of March 11, more than 846,000 businesses have been approved for loans, for a total of more than $44 billion.
The government has also provided $306 million in short-term, interest-free loans and non-repayable contributions through aboriginal financial institutions, which offers financing and business support services to first nations, Inuit and Métis businesses.
Furthermore, the government deferred the collection of income and sale taxes from businesses, freeing up valuable short-term cash when they needed to cover other costs.
This comprehensive package of support has helped ensure that Canadian businesses were able to continue to pay their employees and their bills during a time of uncertainty.
Fighting COVID-19 and getting the economy back on track is not infinite. Once the need for support throughout the crisis has passed, the time-limited measures will be prudently withdrawn.
As government supports transition in the next few months from mitigation to recovery, we will draw upon the lessons learned from the experience of many countries following the 2008-09 financial crisis and during recoveries from earlier deep recessions. This experience suggests that most economies that withdrew fiscal support too quickly experienced slower growth afterward, and Canada will follow the advice of the International Monetary Fund and the Organisation for Economic Co-operation and Development that governments maintain substantial fiscal support through the crisis and over the recovery phase.
As we normalize our fiscal position in the wake of the virus, we will once again do so from a position of strength. While the federal debt is significantly higher than in recent years, it will be far more manageable than at its historic peak in the 1990s.
When the virus is under control and our economy is ready for new growth, our government will deploy an ambitious stimulus package over three fiscal years to jump-start our recovery to support and grow the middle class. This additional spending has not been formally included in the government’s fiscal framework yet, as the ultimate size and timing is highly dependent on the evolving health and economic situation.
Therefore, to ensure that Canada is prepared, our government is planning for four different scenarios regarding the timing, size and profile of the stimulus spending. The growth plan for strong recovery will take us toward an economy that is greener, more innovative, more inclusive and more competitive. The government has been working with Canadians to plan and prepare our investments for when the virus is under control. The key to this plan will be smart, time-limited investments that act fast while also making a long-term contribution to our shared prosperity, competitiveness and our green transition.
Despite recent encouraging signs of recovery, we have not yet turned the corner. About one million Canadians who had a job before the crisis are still out of work or working sharply reduced hours, and many small businesses continue to be greatly impacted by the crisis. The Government of Canada will continue to deploy the necessary fiscal firepower to fight the pandemic and then for us to recover strongly, while continuing to manage its finances prudently, retaining its low-debt advantage among G7 peers. The government’s strategy will be implemented responsibly, with a sustainable approach for future generations.