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A Different Normal - Canadian Politics and Public Policy www.policymagazine.ca - Policy Magazine
www.policymagazine.ca                     September—October 2020
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        Canadian Politics and Public Policy        The
                                               Conservative
                                                  Race

                        A Different
                         Normal

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A Different Normal - Canadian Politics and Public Policy www.policymagazine.ca - Policy Magazine
In This
                                         Canadian  Politics Issue
                                         and Public
                                              2 FromPolicy
                                                         the Editor / L. Ian MacDonald
                                                        A Different Normal and the Tory Leadership
     Canadian Politics and
        Public Policy
                                               3 	Kevin  Lynch and Paul Deegan
                                                   Preparing for Canada’s Next Normal

       EDITOR AND PUBLISHER
                                               7        Kevin Page
                                                        A Fall Budget 2020 Strategy: Drive Toward the Future
          L. Ian MacDonald
      lianmacdonald@gmail.com                  10	
                                                  Shachi Kurl
                                                  The Mood of Canada: Beyond the Coronavirus Summer
         ASSOCIATE EDITOR                               of our Discontent
           Lisa Van Dusen
    lvandusen@policymagazine.ca
                                               13 Bob Kirke and Elliot Lifson
                                                   The Way We Wore: The COVID Crisis in Canada’s
         CONTRIBUTING WRITERS
            Thomas S. Axworthy,                         Clothing Industry
     Andrew Balfour, Yaroslav Baran,
      James Baxter, Derek H. Burney,           15	Vianne Timmons
                                                    A Summer Road Trip: Resilience and Hope on The Rock
    Catherine Cano, Margaret Clarke,
        Rachel Curran, Paul Deegan,
    John Delacourt, Susan Delacourt,           17	Lori Turnbull
                                                    The Politics of Prorogation
       Graham Fraser, Dan Gagnier,
    Helaina Gaspard, Martin Goldfarb,
    Sarah Goldfeder, Patrick Gossage,          The Conservative Race
Frank Graves, Shachi Kurl, Brad Lavigne,
      Kevin Lynch, Jeremy Kinsman,
  Peter Mansbridge, Carissima Mathen,
                                               20	Yaroslav Baran
                                                    The Conservatives and Post-Pandemic Politics
       Elizabeth May, Velma McColl,
   David McLaughlin, David Mitchell,
      Don Newman, Geoff Norquay,
                                               23	
                                                  Geoff Norquay
                                                  Job One for A New Leader—Putting the Party Back Together
     Fen Osler-Hampson, Kevin Page,
    Robin V. Sears, Vianne Timmons,            26       J aime Watt
                                                         Erin O’Toole’s Political, Policy and Pandemic Challenges
         Brian Topp, Lori Turnbull,
   Jaime Watt, Anthony Wilson-Smith
             WEB DESIGN
                                               28	
                                                  Guest Column / Lee Richardson
                                                  Jock Osler, Beloved Politico. Honestly.
             Nicolas Landry
        policy@nicolaslandry.ca
                                               Race for the White House
      SOCIAL MEDIA EDITOR
         Grace MacDonald
   gmacdonald@policymagazine.ca                29        arah Goldfeder
                                                        S
                                                        Reports of the Death of America Have Been Greatly Exaggerated
  GRAPHIC DESIGN & PRODUCTION
          Monica Thomas                        32	
                                                  Column / Don Newman
                                                  Beyond the Election, the China Card
     monica@foothillsgraphics.ca

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2

                               From the Editor / L. Ian MacDonald

                               A Different Normal
                               and the Tory Leadership
    W
               elcome back to the fall           How are Canadians feeling about           perative of uniting the party as Bri-
               2020 semester of politics         life in the pandemic, and the pros-       an Mulroney and Joe Clark did by
               and policy in a world trans-      pects of moving beyond it? The An-        becoming close partners following
    formed from the one we used to know.         gus Reid Institute’s Shachi Kurl has      the divisive 1983 leadership conven-
    With a post-pandemic reality not set-        some attitudinal data to provide us       tion, enabling the Tories to sweep
    tled yet, this is not a new normal           with a look at the mood of Canada         the country the next year. And Jaime
    we’re living in now, but it certainly is     going into the fall.                      Watt observes: “O’Toole has earned
    a different one. We’re looking at the                                                  his win.” But with serious economic
                                                 How has daily life changed in the
    economic and social aspects of that in                                                 and social post-pandemic challenges
                                                 pandemic? Just look at the clothes
    our extensive cover package.                                                           “well beyond the usual uphill battle
                                                 we’re wearing, and not. As Bob Kirke
                                                                                           facing a new leader.”
    We’re also looking, in that very con-        and Elliot Lifson of the Canadian Ap-
    text, at the outcome and outlook for         parel Federation note: “Canadians         And former Conservative MP Lee
    the Conservative Party of Canada             haven’t been going to work, and they      Richardson writes of the passing of a
    and its new leader, Erin O’Toole, as         don’t need to dress up to work from       beloved member of the Conservative
    he becomes leader of the Opposition          home.” That’s a big problem for Can-      family. Jock Osler advised both Clark
    in a minority House.                         ada’s $30 billion clothing industry.      and Mulroney. His life itself was a les-
                                                                                           son in collegial unity.
    And we’re just weeks away from a             Memorial University’s new President,

                                                                                           O
    momentous US presidential elec-              Vianne Timmons, took a month-long                  n the race for the White
    tion in which Donald Trump—the               summer tour of its campuses across                 House, we offer important
    most divisive and disreputable figure        her home province of Newfoundland                  insights shared by experi-
    of the modern era—will either win            and Labrador, and was struck by the       enced Washington hand Sarah Gold-
    a second term or be sent packing by          resilience of the people.                 feder, a State Department alumna.
    American voters.                                                                       Our columnist, Don Newman, him-
                                                 One of the consequences of the pan-
                                                                                           self a former Washington correspon-
    Looking at that different normal, Kev-       demic has been money flying out of
                                                                                           dent, joins the conversation with Be-
    in Lynch and Paul Deegan ask how the         Ottawa, with little due diligence or
                                                                                           yond the Election, the China Card.
    global economic narrative will evolve,       attention to how it’s spent and who
    and in what geopolitical context. And        manages it. The WE Charity scan-          Finally, in Canada and the World,
    as they note: “The nature of work has        dal has provided some damaging an-        Assembly of First Nations Nation-
    changed more in the last six months          swers. When the PM’s mother is paid       al Chief Perry Bellegarde shares his
    than in the previous 20 years.”              $250,000 plus expenses for speeches,      informed perspective on why In-
                                                 everybody gets that. Dalhousie Uni-       digenous self-policing is so success-
    Looking at the Canadian fiscal frame-        versity’s Lori Turnbull considers the     ful, in contrast to the troubles of ra-
    work, former Parliamentary Budget            broader political ramifications, now      cial minorities with conventional
    Officer Kevin Page has never seen any-       including prorogation.                    law enforcement.
    thing like the stimulative deficits of Ot-

                                                 L
    tawa’s pandemic response. Even with                 ooking at the outcome of the       On the 25th anniversary of the 1995
    a deficit of $343 billion in the summer             Conservative leadership race,      Quebec referendum, author and jour-
    update, he notes that Canada’s low                  strategist Yaroslav Baran of-      nalist Graham Fraser looks back at
    debt-to-GDP ratio gives Ottawa a mar-        fers a 9-point check list of priorities   how it changed both Quebec and
    gin of manouevre. As he writes: “The         for the new leader. He’ll have ev-        Canada. And Jean Charest, key-
    economics of deficits have changed.          erything on his plate, including the      note speaker at the historic rally of
    With next-to-zero interest rates and         challenge of bringing moderate and        100,000 people that may have saved
    no inflation in near sight, there are        social Conservatives together. Geoff      the No campaign, offers his memo-
    virtually no bottom-line balance sheet       Norquay looks at exactly that, with       ries of that day marked by an overrid-
    impacts of running larger deficits.”         a keen eye on history, and the im-        ing question of country.

    Policy
A Different Normal - Canadian Politics and Public Policy www.policymagazine.ca - Policy Magazine
3

The corner of the Sparks Street Mall and O’Connor in Ottawa. Normally the busiest pedestrian corridor in the capital, with the CBC building (left) and
the back of the National Press Building (right), the street was shut down and utterly deserted during the pandemic lockdown. Nabil Salah Unsplash photo

Preparing for
Canada’s Next Normal
After an unprecedented summer of physical distancing Kevin Lynch
and damage assessment, individuals, governments and and Paul Deegan
global stakeholders are moving forward from crisis mode

                                                                                                     T
                                                                  he COVID-19 pandemic has
to planning for a post-pandemic reality. What might that          not only rocked society today,
inter-woven economic and geopolitical narrative look like?        it is reshaping our tomorrow—
                                                           rapidly accelerating trends that will
Former BMO Vice Chair Kevin Lynch and former CN and define the “next normal” for Canada
BMO executive Paul Deegan offer some insights.             and the world.

                                                                                                     Unless there is another wave of the
                                                                                                     virus, we are through the shutdown
                                                                                                     phase, where governments locked
                                                                                                     down economic and social activity
                                                                                                     to plank the curve and preserve the
                                                                                                     health care system. Government fis-
                                                                                                     cal policies during the shutdown
                                                                                                     have been geared to three things—li-
                                                                                                     quidity, liquidity, and liquidity. The
                                                                                                     shutdown, while necessary, caused
                                                                                                     the first-ever recession driven by the
                                                                                                     services sector, not the goods sector
                                                                                                     of the economy. Unlike the 2007-

                                                                                                                   September/October 2020
A Different Normal - Canadian Politics and Public Policy www.policymagazine.ca - Policy Magazine
4
    2009 period, which affected men par-
                                                          The 2020 pandemic recession has disproportionally
    ticularly hard, especially in construc-
    tion and manufacturing, the 2020                      hit women and visible minority workers in service
    pandemic recession has dispropor-             sector jobs. This, combined with the higher incidence of
    tionally hit women and visible mi-            coronavirus in senior care facilities and among
    nority workers in service sector jobs.        marginalized communities, makes COVID-19 inequality
    This, combined with the higher inci-
    dence of coronavirus in senior care
                                                  a pressing issue.
    facilities and among marginalized
    communities, makes COVID-19 in-
    equality a pressing issue.

    Having successfully convinced soci-           A return to the old normal is not in       Asia, with less reliance on China, and
    eties of the imperative to physically         the cards—there will be fundamen-          there will be a push to re-localize sup-
    distance and shut down normal day-            tal and lasting impacts from the pan-      ply chains for critical goods. Digital
    to-day activities, we are now moving          demic. These aftershocks include: a        services trade will be constrained by
    into the restart phase—the unlock-            disruption of global trade and invest-     geopolitical battles over technology
    ing of the economy and society. This          ment patterns; a debt hangover of          standards, taxes, internet rules and
    has been complex and confusing,               historic proportions; a fundamental        cybersecurity protocols.
    with contradictory signals from gov-          redesign of work and the workplace
                                                                                             More rigorous screening of foreign di-
    ernments and public health experts.           (including education and the class-
                                                                                             rect investment will emerge from the
    Truly, this is the intersection of de-        room) with highly-intensified digiti-
                                                                                             global recession to protect battered
    mand and supply, where firms need             zation; a recognition that a resilient
                                                                                             domestic firms, and will be ampli-
    to rehire and spend; individuals need         health care system is both a social as-
                                                                                             fied by geopolitical tensions. Linger-
    to return to work and consume; and            set and an economic imperative; and
                                                                                             ing coronavirus fears will see declines
    trade needs to flow. And all of this is       geopolitics on steroids, with impacts
                                                                                             in people movements, particularly
    happening with lingering economic             touching all countries.
                                                                                             international air travel, internation-
    and epidemiological uncertainty and

                                                  W
                                                                                             al tourism, and international educa-
    very real and very personal health                         e are witnessing a de-inte-
                                                                                             tion—a major source of funding for
    and safety concerns.                                       gration of the global
                                                                                             Canadian universities. One conse-
                                                               economy after decades

    W
                                                                                             quence of this deglobalization will be
                  hile the economic impli-        of increasing globalization. This piv-
                                                                                             a decline in trade flows and foreign
                  cations of all this are         ot has been stoked by a rising tide of
                                                                                             direct investment flows, particularly
                  easy to see but difficult to    nationalism and protectionism ex-
                                                                                             between China and the West.
    quantify, three things are only too           emplified by the Trump administra-

                                                                                             W
    clear. First, the starting point is a glob-   tion’s tariff wars with China and oth-
                                                                                                         e are in the midst of a debt
    al economy in the sharpest recession          ers, including Canada. It has been fed
                                                                                                         explosion for governments,
    since the 1930s. Second, the timing           by strategic competition between the
                                                                                                         as well as corporations and
    and vigour of the recovery will de-           United States and China in key tech-
                                                                                             households, and it’s on a scale that
    pend on the duration of the pandem-           nologies, such as AI and 5G, as well
                                                                                             Canada has not experienced since the
    ic, the state of business and consumer        as in geopolitical spheres of influence
                                                                                             Second World War. In May, we wrote
    confidence, and the nature of govern-         in Asia and elsewhere. And it was the
                                                                                             in the Ottawa Citizen that the Cana-
    ment support and stimulus measures            choked global supply chains during
                                                                                             dian federal deficit this year could
    yet to come. Third, the recovery will         the pandemic that spurred the grow-
                                                                                             be—combining automatic stabilizers,
    be uneven and the economy will be             ing consensus that the world is over-
                                                                                             supports announced so far, and ad-
    scarred with record bankruptcies and          ly reliant on China—not just for per-
                                                                                             ditional restart stimulus—as high as
    lost jobs for some time to come.              sonal protective equipment, but also
                                                                                             $300 billion (or than 40 percent of all
                                                  for pharmaceuticals and their con-
    And perhaps the most challeng-                                                           the net debt accumulated since Con-
                                                  stituent compounds, telecommuni-
    ing phase is yet to come, the “next                                                      federation). Our estimate turned out
                                                  cations hardware, semiconductors,
    normal”, with the complex reboot-                                                        to be shy of the $343 billion, forecast
                                                  smart phones, solar panels, wind tur-
    ing of the economies and societies                                                       by former finance minister Bill Mor-
                                                  bines, lithium-ion batteries for elec-
    post-pandemic. Few crises change ei-                                                     neau in the July fiscal “snapshot”.
                                                  tric vehicles and other, non-com-
    ther everything or nothing, and the                                                      To put this year’s deficit in context,
                                                  moditized, manufactured goods.
    COVID-19 pandemic will be no dif-                                                        it is about the same size as total fed-
    ferent. So, what might the “known             In the next normal, diversification        eral spending in a normal year and
    unknowns” of lasting change in the            of supply chains will be the imper-        represents about 16 percent of GDP.
    next normal include?                          ative. They will move elsewhere in         Next year, the deficit could easily ex-

    Policy
A Different Normal - Canadian Politics and Public Policy www.policymagazine.ca - Policy Magazine
5
ceed another $100 billion, depending                         framework that supports both growth                          In the next normal, working from
on the strength of the recovery and                          in the natural resource sector and im-                       home will become a regular part of
the political willingness of the gov-                        proved environmental outcomes?                               the norm, but only part. Businesses
ernment to ramp down its massive                             When are we going to upgrade skills                          will design new hybrid home-and-of-
new spending support programs.                               training for a digital economy?                              fice work arrangements, create lower
                                                             Where are we going to find new mar-                          density office settings, substitute vir-
All this will push the federal net debt-
                                                             kets for our exports in a world of de-                       tual meetings for travel, platoon em-
to-GDP ratio from 30 percent to 49
                                                             coupling trade? Without such a cred-                         ployees at the office rather than all-
percent this year, and our gross debt-
                                                             ible growth plan, global markets will                        hands-on-deck all the time, and shift
to-GDP ratio to over 100 percent,
                                                             place upward pressure on Canadian                            to staggered work hours to respond to
putting at risk Canada’s vaunted debt
                                                             risk spreads and downward pressure                           health concerns around mass public
advantage. Near-zero interest rates
                                                             on Canada’s credit rating (Fitch has                         transit and crowded elevators.
make this fiscally affordable as long
                                                             already taken away our enviable Tri-
as they stay near zero. Rising debt-to-
                                                             ple A status) while foreign direct in-
GDP ratios make this fiscally stable as
                                                             vestment will seek opportunities else-                               The workplace has
long as markets have confidence in                                                                                                become more virtual,
                                                             where. Without a credible fiscal plan,
the government’s ability to manage
the deficit post- pandemic and flat-
                                                             these pressures will only intensify.                         more mobile, less physical,
                                                                                                                          and perhaps less routinized.

                                                             T
ten the debt curve. The next normal’s
                                                                    he nature of work has changed
prospect of low long-term economic                                                                                        For work and education,
                                                                    more in the last six months
growth makes managing this moun-
                                                                    than it had in the previous 20
                                                                                                                          things may never be as they
tain of debt very challenging.                                                                                            were before.
                                                             years. Employees are working from
This now trillion dollar plus moun-                          home en masse and effectively, doc-
tain of public debt, combined with                           tors are doing tele-medicine as a mat-
high household debt and nonfinan-                            ter of practice, not exception. Con-
cial corporate sector debt leverage,                         sumers are buying online as never
will require a clear and credible fis-                       before, and stores, by necessity, are
cal plan and growth plan to address                          finding ways to deliver. Educators                           Employers will worry about productiv-
it. How do we justify interprovincial                        have moved out of the classroom and                          ity in a work-from-home world, and as
trade barriers in an era of low growth?                      onto Zoom. The workplace has be-                             a consequence will focus investment
What are we going to do to raise Can-                        come more virtual, more mobile, less                         and resourcing decisions on digitiz-
ada’s abysmally low productivity per-                        physical, and perhaps less routinized.                       ing and adapting to a much more dig-
formance? How can we grow the na-                            For work and education, things may                           ital workforce and a much more dig-
tional economy without a regulatory                          never be as they were before.                                ital customer—in both in the B2C

    Fiscal Outlook                                                                           Direct COVID Support Measures
    Canada (C$ blns, except where noted)                      19/20e 20/21f                  Program or measure (FY20/21)                                         $ blns
    Revenues                                                   341.0    268.8                                                                     1
                                                                                             Canada Emergency Wage Subsidy (CEWS)                                  82.3
    Expenditures                                               375.3    612.1
        Program Spending                                       350.8    592.6                Canada Emergency Response Benefit (CERB)                 2
                                                                                                                                                                   73.1
        Public Debt Charges                                     24.5     19.5                Funding for health personal protective equipment                      14.0
    Adjustment for Risk                                            --       --               Canada Emergency Business Account (CEBA)                              13.8
    Budget Balance                                             (34.4) (343.2)                Temporary GST credit enhancement                                       5.5
    Federal Debt                                                 717     1060                Canada Emergency Student Benefit                                       5.3
    As a percent of GDP: Budget Balance                         (1.5)  (15.9)                Top-up of essential worker wages                                       3.0
                                Federal Debt                      31.1        49.1           One-time payment to OAS and GIS recipients                             2.5
.
                                                                  BMO Capital                Canada Emergency Commercial Rent Assistance                            2.4
    Economic Assumptions
    (percent)                              Ottawa                    Markets                 Temporary child benefit enhancement                                    2.0
                                      2019 2020        2021       2020 2021                  Various other measures                                                24.1
    GDP Growth           Real          1.7 -6.8         5.5        -6.0    6.0               Total direct support
                                                                                                                      3
                                                                                                                                                                  228.0
                     Nominal           3.6 -6.3         7.9        -6.1    7.5
    Yields     3-month T-Bill          1.7   0.5        0.3         0.5    0.2               1 Assumes extension and program modification to incent hiring. Details pending.
                                                                                             2 Includes extension from 16 weeks to 24 weeks
                 10-year GoC           1.6   0.8        1.0         0.8    1.0               3 Direct support only. Tax deferral, liquidity and lending programs not included
    Source: Fiscal Snapshot   Note: GDP figures are for calendar year (FY19/20 = CY19)
                                     ( ) = deficit; e = estimate; f = forecast           Sources: BMO Capital Markets, Fiscal Update
.                                                                                        .

                                                                                                                                         September/October 2020
A Different Normal - Canadian Politics and Public Policy www.policymagazine.ca - Policy Magazine
6
    (business-to-consumer) and B2B (busi-     competitive advantage compared to          of a world where superpowers take an
    ness-to-business) spaces. They will in-   other countries such as the US with        a la carte approach to a rules-based
    vest heavily in cloud-based human         our universal Medicare system and          system and the rest of us scramble.
    capital management and sales soft-        well-connected health care institu-
                                                                                         What the failure to secure a seat on
    ware to engage employees, custom-         tions coast-to-coast.
                                                                                         the United Nations Security Council
    ers and prospects. Digital commerce
                                              Going forward, we should expect a          demonstrated is not that the world
    will continue to soar, and traditional
                                              strong public consensus that Can-          doesn’t like us anymore, but they
    brick and mortar retailers will either
                                              ada needs a best-in-class pandem-          don’t think they need us as much
    adapt and innovate, or they will die.
                                              ic response capacity, including ear-       as they did. They don’t see a Cana-
    Logistics to support online commerce
                                              ly warning systems, stockpiles of          dian foreign policy to align to, part-
    will be a business priority. Merger and
                                              critical equipment, skilled pandem-        ner with, or support in this new nor-
    acquisition activity will increase as
                                              ic care capacity, facilities to devel-     mal of dangerous geopolitics. We are
    high-quality assets shift from the bat-
                                              op and produce antiviral treatments        not leading on the Arctic, which is
    tered to the strong. Corporate concen-
                                              and vaccines, adequate testing and         becoming a focal point for US, Chi-
    tration will continue to increase, par-
                                              tracking capacity, and surge capaci-       na and Russia. We are not leading
    ticularly in the info-tech space.
                                              ty in ICU beds. Social cohesion and        on peacekeeping or peacemaking or
    And, without a vaccine, it is hard to     federal-provincial cooperation will        development in a world where local
    see universities and colleges either      be tested in the next normal as diffi-     tensions have global consequences.
    attracting large numbers of interna-      cult policy choices and tough finan-       We are underinvesting in defence de-
    tional students or cramming hun-          cial constraints apply in government       spite it being a collective NATO ob-
    dreds upon hundreds of students           decision making. But pandemics are         ligation. We are no longer viewed as
    into lecture halls—both key elements      sadly not a once-off, and neither can      having unique relationships with the
    of today’s higher education business      be investments in health care re-          two superpowers but have not devel-
    model. A shift to more online educa-      sponse capacity and infrastructure.        oped new alliances to offset this. In
    tion, which attempts to address both                                                 short, we need a clear and compel-

                                              P
    these risks, puts a very high premium            rior to the pandemic, the US,       ling foreign policy for the new nor-
    on quality and innovation because,               China, and Russia were engag-       mal, one that blends national in-
    in the absence of physical proximity             ing in the sort of “Big Pow-        terest with multilateralism and a
    and exclusivity, a student can attend     er” behaviours not seen in decades.        rules-based system.
    a university or college anywhere.         The pandemic has vastly reinforced
                                                                                         COVID-19 has attacked our lives and
                                              these tensions, particularly between

    T
                                                                                         livelihoods, and it has shaken our
           his is the third pandemic in       China and the US It has reinvigorat-
                                                                                         economies and the world order. We
           just 17 years, and something       ed nationalism, in those countries
                                                                                         need to up our leadership game in
           the public will not soon for-      and elsewhere, where blaming “oth-
                                                                                         the world, we need to make difficult
    get. Indeed, public confidence that       ers” is a substitute for taking own ac-
                                                                                         domestic economic decisions for the
    we are relatively safe from catching      countability. Attacks on the WHO,
                                                                                         long-term, and we need to move on
    COVID-19 when returning to work           the failure of the G20 and G7 to co-
                                                                                         quickly to shape the next normal
    and re-engaging in social activities,     ordinate and lead, resistance to new
                                                                                         for Canada. Prorogation may have
    and that the health care system has       IMF resources to help in the crisis, ig-
                                                                                         been politically motivated, but the
    the resiliency and surge capacity to      noring international analysis—these
                                                                                         upcoming Speech from the Throne
    deal with another wave of COVID-19        all point to the weakness of inter-
                                                                                         provides an opportunity to sketch
    or another virus, will be crucial el-     national cooperation and stand in
                                                                                         out a bold plan to build a more pros-
    ements in the vigor and speed of          sharp contrast to how major coun-
                                                                                         perous and inclusive Canada. As for-
    the recovery.                             tries came together to act in the col-
                                                                                         mer prime minister Brian Mulroney
                                              lective interest during the 2008-09 fi-
    Social cohesion during the shut-                                                     stated recently, “Incrementalism
                                              nancial meltdown.
    down phase has been high in many                                                     builds increments. Bold initiatives
    countries, and federalism has worked      In the next normal, we should expect       build nations.”
    very well in Canada during the shut-      a “back to the future” moment for
    down phase. What is clear is that a       geopolitics. Rising nationalism, pro-      Contributing Writer Kevin Lynch was
    strong and resilient health care sys-     tectionism, de-globalization, and an       formerly Clerk of the Privy Council and
    tem is both a social asset and an eco-    increasing antipathy to multilateral       Vice Chair of BMO Financial Group.
    nomic imperative in a world threat-       institutions pose significant risks for    Contributing Writer Paul Deegan,
    ened by pandemics. And, despite           mid-sized, open countries like Canada      CEO of Deegan Public Strategies, was
    missteps and mixed signals early in       which rely on trade, enforceable rules-    a public affairs executive at BMO
    the pandemic response, Canada has         of-the-game and a global marketplace.      Financial Group and CN, and served in
    found its footing and has a structural    Canada will be caught in the middle        the Clinton White House.

    Policy
A Different Normal - Canadian Politics and Public Policy www.policymagazine.ca - Policy Magazine
7

A Fall Budget 2020 Strategy:
Drive Toward the Future
If the 2008 financial cataclysm gave economists a bad                                        that means you haven’t gathered
                                                                                             enough information.
name, the health and economic implications of the
                                                                                         To state the obvious, the current pub-
COVID-19 lockdown have generated demand for all the                                      lic health crisis and the scale of eco-
expertise and ingenuity they can muster. As former Par-                                  nomic fallout from containment
liamentary Budget Officer Kevin Page writes, Canada ur-                                  measures is unprecedented. We have
                                                                                         not experienced declines in output
gently needs policies to address long-term issues such as                                and employment of similar mag-
climate change, income disparity, economic and health                                    nitude since the Depression in the
                                                                                         1930s (Chart1). If we rely on past
resiliency and competitiveness.                                                          (stimulus-type) policies to guide eco-
                                                                                         nomic recovery plans they will like-
                                                                                         ly be misguided and fall dangerous-
Kevin Page                                  cine—and trying to find a govern-            ly short. We cannot collapse present
                                            ing philosophy for fiscal policy in a        policy thinking into the past.

I
     t is a safe assumption that govern-    world awash in debt.
     ment of Canada cabinet minis-                                                    Economic planning scenarios in
     ters and Finance Department            If our political leaders and my former the future will center on a range
officials have spent much of their          public service colleagues get a chance of epidemiological outcomes for
summer thinking about an econom-            to read one spy novel before the frost COVID-19 (i.e., vaccine, no vaccine;
ic recovery plan for Canada and a           hits the ground, I recommend The number and size of waves of infec-
fall budget.                                Paladin, by David Ignatius. In a pe- tion) and individual country and
                                            riod of great difficulty, the principal global health and economic policy
The political and economic stakes           character tells himself to ‘move’. Chart 1responses. Gone is the focus on one
are high. With the prorogation of
                                               When the present
                                                             GDP: Allcollapses             baseline 2012
                                                                               intoMillions.Chained,
                                                                      Undustries,                    scenario. Gone is the
                                                                                                          C$ Employment,    as-
                                                                                                                         Thousands
Parliament, triggered in part by the
                                               the past, the only path of escape is        sumption   that individual countries
resignation of a finance minister, the
                                               to drive toward the future. When            can pretend to isolate themselves
government will table a Speech from
                                               you don’t understand a problem,             from what is happening elsewhere.
the Throne in late September.

This will be a vote of confidence. If
                                            Chart 1: COVID19 Impacts on GDP and Employment
the government fails, we are headed
to a fall election. If the government      Millions CAD
succeeds, Parliament and Canadians
                                              2,000
will push for a fall budget to ensure                                                                                       19,250
                                              1,950
words turn into deeds.
                                              1,900                                                                         18,750
While I’ve been reading spy novels,           1,850
                                                                              GDP, 2012 dollars
they are looking over the shoulders                                                                                         18,250
                                              1,800
of colleagues in the European Union                                                                                         17,750
and possibly US presidential candi-           1,750
                                                                              Employment, thousands
date Joe Biden to see what they are           1,700                                                                         17,250
planning for recovery. They are as-           1,650
                                                                                                                            16,750
sessing recently announced provin-            1,600
cial (e.g., Ontario and Alberta) and                                                                                        16,250
                                              1,550
municipal recovery plans. They are
reading geeky disquisitions on possi-         1,500                                                                         15,750
                                                    2009 2010 2011 2012 2012 2013 2014 2015 2016 2017 2017 2018 2019 2020
ble economic scenarios for the world                 Jul. May Mar. Jan. Nov. Sep. Jul. May Mar. Jan. Nov. Sep. July. May
economy—with and without a vac-
                                           Source: Statistics Canada

                                                                                                      September/October 2020
                                           Chart 2: IMF Projections of Net Debt to GDP
A Different Normal - Canadian Politics and Public Policy www.policymagazine.ca - Policy Magazine
8
    Plans are required for multiple sce-       ting government debt on bank bal-            explain the trade-offs and risks of defi-
    narios. Uncertainty cannot be an           ance sheets) around the world to ease        cit finance to Parliament and Canadi-
    excuse for no plans. As the saying         the burdens of governments going to          ans and the evolving role of our inde-
    goes, “No plan, no action leads to         markets to raise money. While some           pendent central bank. The pressure is
    no results”.                               will argue correctly this is not new,        on macroeconomists to give us a new

    T
                                               the amounts are setting records.             governing philosophy for fiscal and
           he Organisation for Econom-                                                      monetary stabilization policy.
           ic Cooperation and Develop-
           ment (OECD) suggests that                    Targeted policies                   How do policy makers transition
    countries should think of at least four             are essential. The                  from fiscal supports essential to help
    phases of policy responses: 1) imme-       process has started with                     households and businesses during
    diate (Canada is beyond this stage);                                                    containment and re-opening phases
    2) cushioning impacts and preserving
                                               the evolution of programs                    to a post-COVID world, given the
    capacity (ongoing); 3) recovery; and       like the wage subsidy and                    prospects for a weak, drawn-out and
    4) resilience and debt management.         employment insurance.                        uneven recovery?

                                                                                            T
    The transition from phase 2 to 3 will      With high but declining
    not be “linear and smooth”. Differ-                                                             argeted policies are essential.
    ent industrial sectors and people will
                                               unemployment rates and no                            The process has started with
    not get to the recovery phase at the       vaccine in sight, expect this                        the evolution of programs like
    same time.                                 to continue.                                 the wage subsidy and employment in-
                                                                                            surance. With high but declining un-
    As somebody who worked in an                                                            employment rates and no vaccine in
    auto garage during high school and                                                      sight, expect this to continue but with
    learned to drive in an old tow truck                                                    increased focus on people and busi-
    (1950s Ford) with a standard trans-                                                     nesses locked out of the recovery.
    mission—can you ride the clutch
                                               The economics of deficits have               As McKibben and Fernando (CEPR,
    without causing harm to the trans-
                                               changed. With next-to-zero interest          2020) point out in a recent pa-
    mission? Do you have a choice, when
                                               rates and no inflation in near sight,        per assessing prospects for differ-
    you’re starting on a hill? In econom-
    ic speak, there are costs to living with   there are virtually no bottom-line bal-      ent COVID-19 economic scenarios,
    more debt. Debt finance is the eco-        ance sheet impacts of running larger         “Withdrawing macroeconomic sup-
    nomic transmission fluid.                  deficits. All the risks are punted to the    port and creating ‘fiscal cliffs’ through
                                               future. Debt creates instability risks. If   setting expiration dates on critical fis-
    Fiscal and monetary policy are (have       years down the road, inflation makes a       cal support policies in economies is
    been) headed into uncharted waters.        comeback, interest rates will rise. The      likely to worsen the uncertainty and
    Since the 2008 financial crisis, terms     carrying cost of debt will skyrocket.        increase economic costs.”
    like “quantitative easing” are becom-      Higher debt interest costs will crowd
    ing commonplace in the speech-             out spending on key policy priorities.       Should policymakers focus on long-
    Chart  2: IMF Projections
    es of central             of Netbanks
                  bankers. Central    Debt to GDP                                           term goals as they develop COVID-19
    are working with governments (put- The pressure is on finance ministers to              economic recovery policies? Yes.

    Chart 2: IMF Projections of Net Debt to GDP
     Percent

      180
      160            2018          2019     2020       2021
      140
      120
      100
        80
        60
        40
        20
          0
                 Canada            France   Germany         Italy          Japan         United         United      Advanced
                                                                                        Kingdom         States      Economies
    Source: International Monetary Fund

    Policy International Monetary Fund
    Sources:
9
The European Union has already                                                      din. If they do, maybe the economic
                                                   While financing the
launched its recovery policy path                                                   recovery strategy will be focused on
to the future. They have recently                  challenges will                  long-term challenges. We can use a
agreed to a trillion dollar plus (Ca-      depend on a presidential                 Canadian version of the “missions”
nadian) recovery fund. The policy          victory and congressional                approach to generate the evidence,
framework is composed of five big          backing, the Democratic                  collaboration, and policy experimen-
missions—cancer, climate change,                                                    tation to hit defined targets.
oceans, cities, and food. The mis-
                                           candidate is proposing
sions are designed to bring evidence,      government support well in               If we are going to use deficit finance
resources and policy experimenta-          excess of a trillion dollars.            to dig our way out the economic hole
tion to long-term issues. Targets will                                              created by COVID-19 then it is essen-
be set—along the lines of President                                                 tial that spending is future-focused to
John F. Kennedy’s 1961 vow to put                                                   help the next generation. In a Cana-
a man on the moon by the end of                                                     dian context, the EU/US long-term
the decade.                                                                         fiscal stimulus would be well in excess
                                           capacity to address the next policy      $100 billion over the next five years.
US Presidential candidate Joe Biden        shock, whether a pandemic or finan-      This number might have been incon-
will campaign on a long-term recov-        cial or geopolitical crisis), and com-   ceivable a few years ago, but not now
ery policy “Build Back Better”. The        petitiveness are urgently needed.        in the context of an estimated decline
high-level plan focuses on four long-      Governments need to lay out a vi-        in GDP of 7 percent in 2020, millions
term challenges—manufacturing, in-         sion (a north star) and plans to build   of Canadians out of work, and a re-
frastructure, children, racial equality.   confidence and partnerships (invest-     cord increase in the estimated federal
While financing the challenges will        ment). Why not pro-actively shape        deficit to $340 billion. If our compet-
depend on a presidential victory and       and drive our future—more sustain-       itors can afford it, can we afford not
congressional backing, the Demo-           able, more equitable, more resilient,    too when our public finances are in
cratic candidate is proposing govern-      more digital.                            better shape?
ment support well in excess of a tril-
lion dollars.                              I hope that over the summer and ear-     Contributing Writer Kevin Page,
                                           ly fall that cabinet ministers and fi-   formerly Canada’s first Parliamentary

I
  n Canada, policies to address            nance officials spend some time          Budget Officer, is founding President
  long-term issues such as climate         reading EU documents and US presi-       and CEO of the Institute for Fiscal
  change, income disparity, eco-           dential campaign materials and may-      Studies and Democracy (IFSD) at
nomic and health resiliency (i.e., our     be the odd spy novel like The Pala-      University of Ottawa.

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                                                                                               September/October 2020
10

     The Mood of Canada:
     BEYOND THE CORONAVIRUS SUMMER OF OUR DISCONTENT

     Shachi Kurl                                      This summer of                         job of Secretary General of the OECD.
                                                      our coronavirus                        All but officially, to quell what was

     S
           ix months in, no clear end in                                                     turning into open warfare between
           sight. As Canadians turn their     discontent was also                            the Prime Minister’s Office and Mor-
           first major corner living with     punctuated by non-stop                         neau, whose proximity to and expen-
     COVID-19, here’s some develop-           political drama that started                   sive travel with WE did an already-
     ments to watch for this fall, and some
                                              with a now-cancelled                           damaged Justin Trudeau no favours
     thoughts on how public opinion will                                                     in the affair.
     affect them.                             contract to WE Charity to
                                              run a student volunteer                        In an administration pocked by re-
     At the Angus Reid Institute we were
     in the field in mid-August, asking
                                              program and ended with                         sets, Morneau’s departure offers a
                                              the awkward resignation                        tantalizing opportunity for anoth-
     Canadians whether they approved
                                                                                             er, albeit risky one. For better or for
     or disapproved of Justin Trudeau         of Finance Minister Bill                       worse, Trudeau has been the face of
     as prime minister. His approval rat-     Morneau.
     ing, high during the first several                                                      his government. Having soared in ap-
     months of the pandemic, definitely                                                      proval in the first months of the pan-
     took a major hit with the WE Char-                                                      demic, the scandal has largely eroded
     ity negative news explosion over                                                        whatever gains he made.
     the summer.                              non-stop political drama that started
                                                                                             In a largely anonymous cabinet, Mor-
                                              with a now-cancelled contract to WE            neau was one of the better known,
     We looked at a lot of things Cana-
     dians are concerned about, and the       Charity to run a student volunteer             but least publicly liked ministers. He
     re-opening of schools was high on        program and ended with the awk-                is now replaced by one of his only
     the anxiety list, although Canadians     ward resignation of Finance Minister           other well-known cabinet colleagues
     as a whole were more anxious about       Bill Morneau. Officially, to try for the       Chrystia Freeland.
     the situation than they were relieved
     to have come through it. And while
                                              Chart 1: Do you approve or disapprove of Justin Trudeau. August 2020
     generally approving of vaccinations
     (46 percent) should an effective one
     become available, many said they                                               64%
     would wait a while before getting one        60%         61%
     (32 percent). In terms of diversions,                                                    54%      55%                 54%
                                                                             51%                                  50%
     the prospect of the summer NHL
     playoffs beginning in August had 72
     percent of Canadians very or some-                        36%                                                48%
                                                  35%                                         44%      44%                  44%
     what excited about the prospect of                                      43%
     the return of hockey.
                                                                                    33%
     It would have been too much, I sup-
     pose, to have hoped in this most try-
     ing of years the political Gods might                                   6%
                                                  5%           3%                   3%
     have given us the summer off. If ever                                                     2%       1%        2%        2%
     we needed to flake out, to swing in
     our hammocks, to lounge lakeside            Oct          Dec             Jan   Feb       Apr      May     Jul 10-11 Jul 23-24
     and contemplate our altered lives in        2019         2019           2020   2020      2020     2020      2020      2020
     the “new normal”, surely it would
     have been these past weeks.
                                                                      Approve            Disapprove           Don't know
     Alas, this summer of our coronavirus
     discontent was also punctuated by        Source: Angus Reid Institute

     Policy
11
  Freeland has a high profile and has ately affected by the pandemic back eral caucus’ bench-strength. It’s mus-
  carried high approval ratings. But into the workforce, and re-starting cle they’ll need build in order to fend
  she will come to one of the most de- Canada’s economy from all but a off attacks from a Conservative Party
  manding and high-stakes jobs in gov- standstill are each daunting enough. refreshed with new leadership.
  ernmentofalready
Percentage           carrying
              Canadian  childrenher
                                 agesduties   Freeland
                                      10 – 17 who       may
                                                  say each is abe'big
                                                                   a political
                                                                      worry' fordynamo,
                                                                                 them (n=650)
  as Deputy Prime Minister. Tasks such but a super-powered eight-armed Ve- Little wonder then, that Trudeau pro-
  as transitioning from CERB to an en- dic goddess she is not. Stretching any rogued Parliament, announcing Au-
  hanced Employment Insurance pro- mortal this thin also highlights what gust 18 the beginning of a new ses-
  gram, getting women disproportion- has been a chronic deficit in the Lib- sion on September 23, only two days
                                                                                           after the previous session was to have
                                                                                           resumed. But he also promised an
  Chart 2: Percentage of Canadian children ages 10 – 17 who say each is                    early vote of confidence on the new
  a ‘big worry’ for them. (n=650) May 2020                                                 Speech from the Throne. The oppo-
                                                                                           sition Conservatives may not like it,
                                                                                           but hey, Stephen Harper set the prec-
           Missing out on next school year                                        29%      edent in 2008 proroguing a minori-
                                                                                           ty House to avoid defeat on a confi-
                                                                                           dence motion.
    Missing out on this current school year                                      27%

                                                                                          L
                                                                                                 uckily for the Trudeau govern-
                     Other family getting sick                                  26%              ment, what is likely to be the
                                                                                                 single biggest stressor for par-
                                                                                          ents over the next three months falls
        Parents getting sick from COVID 19                                 22%            under provincial jurisdiction. As
                                                                                          tantalizing as the prospect of no lon-
                       Parents losing/lost work                           20%             ger home-schooling the kiddies may
                                                                                          be, what appears to be patchwork of
                                                                                          at times nebulous, yet-to-be-defined,
                           Getting sick yourself                   15%                    back to school plans from province
                                                                                          to province offers little comfort.
          Tension or arguments where I live                    12%                        Guidance around social bubbles is
                                                                                          effectively popped with all the small
                                                                                          folk hanging around with each oth-
  Source: Angus Reid Institute
                                                                                          er again. Multi-generational house-
  Table 1: How Canadians say they have been feeling over the                              holds that depend on grandpar-
  past few weeks. August 2020                                                             ents for pick-ups and drop-offs are
                                                                                          flummoxed.

                                                    COVID Compliance Index                Two key upsides of sending kids back
                                                                                          to school: it enables many parents
                                             Infection         The            Cynical     without alternative childcare to go
                                  Total
                                              Fighters     Inconsistent      Spreaders    back to work. It’s also what the kids
                                 (n=1,511)
                                              (n=704)        (n=537)            (n=270)   want. In the spring, just six weeks
                                                                                          into the transition to learning from
   Worn out/Fatigued               37%             34%          40%              40%
                                                                                          home, Canadian children were so
          Anxious                  26%             29%          26%              20%      over it. They were missing friends,
                                                                                          feeling unmotivated, and worried
          Grateful                 22%             26%          19%              15%      about falling behind in class:

          Normal                   21%             20%          22%              24%      Sending kids back to class will repre-
                                                                                          sent an unprecedented public health
           Happy                   15%             16%          14%              17%      experiment. If it doesn’t go well, ex-
                                                                                          pect the grown ups to give their pro-
           Bored                   14%             14%          16%              12%      vincial politicians failing grades.

                                                                                          C
           Lonely                  11%             11%          11%              11%            oronavirus fatigue set in a
                                                                                                long time ago, but it’s how
           Angry                    9%             7%           7%               17%            we’re dealing with it that sets
  Source: Angus Reid Institute                                                            segments of Canadian society apart. A

                                                                                                     September/October 2020
12
     Table 2: If a vaccine against the coronavirus became available, would                                    of those who say they wouldn’t get
     you get vaccinated, or not? August 2020                                                                  a vaccine themselves say vaccination
                                                                                                              should be mandatory… for health
                                                                        Region                                care workers.
                              Total
                             (n=1,519)
                                          BC        AB         SK        MB        ON      QC        ATL                Let there be no
                                         (n=205)   (n=156)    (n=127)   (n=126)   (n=448) (n=300)   (n=157)
                                                                                                                        mistake. Canadians
      Yes, I would get a                                                                                      have been intensely focused
     vaccination as soon
       as one became
                               46%        52%       41%       33%        44%       46%     47%       44%      on the greatest concern of
       available to me                                                                                        their lifetime for the last six
         Yes, I would                                                                                         months. A little diversion
       eventually get a
       vaccination, but
                                                                                                              is healthy.
                               32%       30%       30%        31%        32%      35%      29%       34%
        would wait a
          while first

       No, I would not
       get a coronavirus       14%        10%       22%       20%        17%       13%      14%      11%
            vaccine
                                                                                                              When the poet Juvenal wrote of
     Source: Angus Reid Institute                                                                             “bread and games”—it was to illus-
                                                                                                              trate the shallowness of a society ne-
                                                                                                              glecting greater concerns. Let there
     late summer study revealed that while                   If there is such a thing as “back to             be no mistake. Canadians have been
     almost half of Canadians continue to                    normal”—we will not even be able to              intensely focused on the greatest con-
     fight their best fight against commu-                   dream of it until much awaited vac-              cern of their lifetime for the last six
     nity transmission by practicing fas-                    cines find their way up our noses or             months. A little diversion is healthy.
     tidious hygiene, wearing masks and                      jabbed into our arms. It could be a
                                                             long wait. Whenever this potential-              Little wonder then, that hockey fans
     keeping their social bubbles small,
                                                             ly life saving substance is made avail-          left indefinitely in the penalty box
     about one-in-five sit on the other end
                                                             able to the general population, fewer            when the NHL suspended its season
     of the spectrum, and could care less
                                                             than half of Canadians say they’ll be            took to the midsummer playoffs like
     about precautions. These “Cynical
                                                                                                              a power forward to Gatorade. The
     Spreaders” are not only more likely to                  lined up immediately to be vaccinat-
                                                                                                              games have been a little odd, what
     socialize with larger groups of people,                 ed. Indeed, more than 20 per cent say
                                                                                                              with no fans and all, but hockey is
     (often not well known to them, often                    they either won’t get the vaccine or
                                                                                                              hockey, and we have been happy to
     inside, without masks), they also take                  aren’t sure. Willingness to be vacci-
                                                                                                              have it.
     a more jaded view towards the pub-                      nated varies regionally, which means
     lic health officials and politicians ex-                public health officials in some prov-            Sadly for some, the CFL is done for
     horting them to change their ways.                      inces will have more work to do than             the season, having failed in their bid
                                                             others if they hope to achieve vac-              for $30 million from the Trudeau
     A number of factors delineate the                       cination levels above 70 per cent—               government. For a government that
     “Infection fighters” from the “Cyni-                    the number some say is needed to                 calculates (and sometime spectacu-
     cal Spreaders”—but one of the most                      achieve herd immunity.                           larly miscalculates) funding decisions
     striking differences is age. The major-                                                                  based on political math, bailing out

                                                             W
     ity of those 65+ are in the uber-cau-                              hat’s driving some of the             the Canadian Football League may
     tious group. Those aged 18-24 are                                  reticence—or at least the             have earned thanks in the end zone,
     twice as likely as the national aver-                              desire to “wait and see”?             but not at the ballot box. CFL fans
     age to be found among the don’t                         Consider that a majority, six-in-ten—            are a passionate bunch. But predomi-
     care bears. In terms of their mental                    express worries about side effects               nantly over the age of 55, the major-
     and emotional health, the Cynical                       from a hypothetical coronavirus vac-             ity male, they correlate more closely
     Spreaders are far more likely to define                 cine. One-fifth fret the vaccine won’t           with voting Conservative than Liber-
     “anger” as the emotion they’ve expe-                    be effective anyway. And so it goes.             al NDP or Green.
     rienced the most lately when com-                       Shades of anti-vaccination sentiment             Contributing Writer Shachi Kurl is
     pared to other segments. By contrast,                   towards other illnesses are revealed             Executive Director of the Angus Reid
     Infection Fighters are significantly                    around a vaccine that doesn’t yet ex-            Institute, the national non-profit public
     more likely to say they’ve been feel-                   ist. New sickness, old arguments. In             opinion research and polling firm based
     ing “grateful”.                                         one head-shaking finding, 25 percent             in Vancouver.

     Policy
13

The Way We Wore:
THE COVID CRISIS IN CANADA’S CLOTHING INDUSTRY

Among the myriad impacts of the pandemic lockdown on                               rules of origin, the content of fin-
                                                                                   ished Canadian-made clothing was
human behaviour, including commercial consumption pat-                             considered Canadian, irrespective of
terns, has been the fact that, whatever you do for a living                        where it came from.
and whatever your gender, chances are you’re not wearing                           In many respects, the government’s
a suit right now. That fundamental, unforeseeable fact has                         initial response to COVID-19 had to
                                                                                   be broadly based: there was an urgent
shaken Canada’s clothing manufacturers. Bob Kirke and                              need at the outset to stabilize person-
Eliot Lifson of the Canadian Apparel Federation provide                            al incomes and corporate finances.
a case study from the front line of the pandemic recession.                        The government correctly rolled out
                                                                                   benefits for individuals (CERB) and
                                                                                   wage subsidies for firms (CEWS) plus
                                                                                   a host of other programs. As we re-
                                                                                   start, it is becoming clearer that all
                                                                                   sectors of the economy are not equal-
Bob Kirke                                 feet, apart. You don’t need a new suit
                                          for that.                                ly impacted, nor do they need the
and Elliot Lifson                                                                  same policy responses.

A
                                          You get the idea. A major industry is
        fter months of difficult trad-                                             While the apparel sector is among
                                          in big trouble, facing unprecedented
        ing conditions, Canada’s ap-                                               the most seriously impacted by the
                                          and costly change. In Canada, cloth-
        parel industry remains one                                                 pandemic, firms with stronger bal-
                                          ing is a very big industry. The Ca-
of the sectors most impacted by the                                                ance sheets, deeper management
                                          nadian apparel sector (pre-COVID)
COVID-19 crisis. The industry has                                                  skills, and stronger brands were able
                                          employed more than 70,000 people
restarted operations, and is looking                                               to move more of their business on-
                                          and more than $31 billion in cloth-
for signs of recovery and a return to                                              line or pivot to the manufacturing
                                          ing is sold in Canada each year. Pret-
some sort of “normal”. But it is equal-                                            of personal protective equipment
                                          ty good for an industry once written
ly true that substantial restructuring                                             (PPE). Firms that retain signifi-
                                          off for dead. More than anything, the
of the industry is looming.                                                        cant domestic manufacturing have
                                          clothing industry is diverse: On the
When you put it in the context of the     one hand, the Canadian apparel sec-      shown particular resilience through
pandemic, and how it’s changed our        tor is a global industry with domes-     this challenging time. But the reality
lives, it’s not very complicated. The     tic and offshore production, incredi-    is that no industry can lose 30 per-
way we were is gone. And so is the        ble product development, and strong      cent of its annual sales, watch major
way we wore.                              supply chain management capabili-        customers fall into insolvency and
                                          ties. On the other, we have dynam-       not be affected.
Offices have been closed since March.     ic local designers and innovators.
Canadians haven’t been going to                                                    Canadian retail sales of clothing were
                                          Canadian global clothing brands are
work, and they don’t need to dress                                                 down more than 50 percent in March,
                                          both global and local.
up to work from home. Working on                                                   and nearly 90 percent in April. Sales
Zoom, you don’t even need a jack-         In previous years, government-in-        for May and June showed signs of re-
et, much less a suit. A golf shirt and    dustry sectoral groups were a prom-      covery, but only when compared to
shorts will do just fine. From kinder-    inent feature of policy-making.          the complete collapse in March and
garten to graduate studies, nobody’s      In particular, the Sectoral Adviso-      April. The absolute decline in appar-
been going to school. No dressing         ry Group for International Trade         el sales has been compounded by the
up for the graduation ceremony or         (SAGIT) for clothing and footwear,       seasonal nature of the merchandise.
the prom. Weddings and funerals,          played a major positioning role for

                                                                                   N
when they haven’t been cancelled,         the clothing industry in the talks               o other retail commodity has
have been limited to small groups         leading to the Canada-US Free Trade              encountered similar sales de-
of people sitting two metres, or six      Agreement in 1987. Under the FTA                 clines. Prospects for the rest

                                                                                              September/October 2020
14
                                                                                                     We need to confront all of these chal-
                                                                                                     lenges and we need the government
                                                                                                     to be a partner in this. One of the rea-
                                                                                                     sons for this is the significant impact
                                                                                                     of government policies, current and
                                                                                                     planned, on this sector.

                                                                                                     W
                                                                                                                 hile the government has
                                                                                                                 many mechanisms in
                                                                                                                 place for economic guid-
                                                                                                     ance and consultation with the pri-
                                                                                                     vate sector—the sort of restructuring
                                                                                                     likely to take place over the coming
                                                                                                     year within this sector does not fit
                                                                                                     squarely into the mechanisms the
                                                                                                     government has created. Economic
                                                                                                     Strategy Tables and the newly formed
                                                                                                     Industry Strategy Council focus on
     A deserted shopping mall in Montreal during the pandemic. At the low point of the lockdown,     specific priorities. While the govern-
     retail clothing sales in Canada were down 50 percent in March and 90 percent in April, before   ment rightly supports endeavours
     recovering somewhat over the summer. Alesia Kazantceva Unsplash photo
                                                                                                     such as advanced manufacturing, the
                                                                                                     industry is facing sectoral challeng-
     of the year are uneven at best, and the          faced frequently insurmountable
                                                                                                     es and this warrants a different type
     market will stabilize only in 2021. Ca-          challenges in accessing financing—             of action from government. It is time
     nadians are prepared to avoid non-es-            even when the federal government               for the government to complement
     sential purchases and wherever pos-              took on 80 percent of the risk.                these longer-term initiatives with tar-
     sible minimize trips to non-essential                                                           geted engagement with sectors facing
     retail stores.                                   Another issue contributing to the li-
                                                      quidity squeeze facing the sector is           specific challenges, with a 12-to-24
                                                      squarely in the government’s court.            month time horizon to help specific
             Canadian retail                                                                         sectors through this crisis.
                                                      Import duties charged on clothing rep-
             sales of clothing                        resent a significant outlay for import-        The apparel industry needs to be-
                                                      ers, one that is hard to afford in the         come more agile, more sustainable,
     were down more than 50
                                                      present circumstances. In the case of          and more digital—but getting there is
     percent in March, and                            Spring 2020 merchandise, many firms            no small feat. It is important to align
     nearly 90 percent in April.                      imported apparel six to eight months           the needs of the industry with the
     Sales for May and June                           ago and were assessed duties of 18 per-        priorities of the government. For sec-
                                                                                                     tors less impacted by COVID-19, this
     showed signs of recovery,                        cent at the time of import. It should be
                                                      noted that imports represent 90 per-           may not be needed; for ours it is. We
     but only when compared to                                                                       have a skills challenge, international
                                                      cent of clothing sold in Canada.
     the complete collapse in                                                                        trade hurdles, demands from the gov-
     March and April.                                 These duty payments constrain firms            ernment for new, more responsible
                                                      trying to invest in raw materials              sourcing practices, greater sustain-
                                                      needed for the development of new              ability and challenges around digital
                                                      lines and prevent firms from extend-           transformation.
                                                      ing credit to their retail customers.          As we move forward, it will be im-
     Canadian clothing manufacturers/
                                                      COVID-19 is not the first challenge            portant to look ahead and be proac-
     importers finance Canadian retail-
                                                      this industry has faced, nor will it be        tive. We need to bring about a mean-
     ers by extending credit. When fash-
                                                      the last. COVID has accelerated the            ingful recovery for the sector, while
     ion retailers restructure or close,
                                                      pace of change in fashion/retail, en-          helping the industry work through
     their suppliers are the last to be paid.
                                                                                                     a fundamental restructuring. The fu-
     While we commend the government                  abled by technology, and reinforced
                                                                                                     ture of the Canadian clothing indus-
     for measures to support Business De-             by consumer insecurity. This indus-
                                                                                                     try depends on it.
     velopment Canada and Export De-                  try is changing at an incredible pace.
     velopment Canada in lending to                   Brands are moving to sell directly to          Bob Kirke is Executive Director of the
     Canadian business during the pan-                consumers, stronger retailers are re-          Canadian Apparel Federation.
     demic, Canadian financial institu-               balancing their supply chains, diver-          Elliot Lifson is President of the
     tions have been less willing partners.           sifying their offerings, and boosting          Canadian Apparel Federation and
     Companies connected to retail have               e-commerce capabilities.                       Vice-Chairman of Peerless Clothing.

     Policy
15

A Summer Road Trip:
Resilience and Hope on The Rock
Vianne Timmons                                                                                 students. A challenge for me, as a new
                                                                                               president, was how can I be visible?

W
            hen I was turning 15, my
                                                                                               I did use Twitter, but not extensive-
            family left Labrador and
                                                                                               ly. I decided on April 1, the first day
            moved to Nova Scotia.
                                                                                               on the job, to record a video. I filmed
This was one of the most traumatic
                                                                                               a brief amateur 20-second spot and
experiences in my life. Growing up in
                                                                                               posted it. I slipped during one of
Labrador was a wonderful experience.
                                                                                               the takes, and decided to post that
We did not have a lot, but we (six chil-
                                                                                               one, too. Posting little videos be-
dren) had a town full of large families,
                                                                                               came a way to connect with the cam-
friends and activities. I can honestly
                                                                                               pus. People responded positively so
say I had a fabulous childhood.
                                                                                               I bought my first selfie stick. During
I cannot say that about my teenage                                                             these unusual times, we all have to
years. We moved the first of June and       Memorial University President Vianne               adapt, learn new skills and connect
                                            Timmons on the ferry from Newfoundland
my parents decided we did not need to       to her native Labrador. A working family’s         in different ways.
attend school as the year was almost        daughter in the Iron Ore Company town of
over. That meant for three months I         Labrador City, she writes: “I can honestly say I   Though unable to meet with students
                                            had a fabulous childhood.” Stuart Mason photo      in person for the most part, as a pres-
knew no one. It was a lonely time.
                                                                                               ident they are always on my mind.

                                            R
I share this because resilience comes               elocating, buying a house and              So, of course, I have been thinking a
from many places. It is often built from            starting a new job during a                lot about the COVID-19 generation—
experiences that are positive, but also             pandemic was not easy. There               the students of today who are miss-
negative. These experiences can de-         were small challenges, such as being               ing milestones in their lives, such as
fine us. Many people are experiencing       unable to get my Newfoundland and                  graduation and attending university
things during this pandemic that will       Labrador driver’s licence, to bigger               for the first time. They have to adapt,
have a lasting impact on them. I hope       ones, like difficulty getting the inter-           learn new skills and figure out differ-
resilience will help see them through.      net hooked up in my home. These                    ent ways to connect.
I accepted a new job in December            issues resolved themselves over time.
2019 as President and Vice-Chancel-         But as you will read, not everyone                         In early July, when
lor of Memorial University of New-          can get internet issues fixed.                             Newfoundland
foundland in St. John’s. I served as
                                            As a university president it is import-            and Labrador lifted some
President of University of Regina for
11 years prior and had many great ex-       ant to have a solid team. I am fortu-              pandemic restrictions, I
periences during that time. In March        nate as I did inherit such a team. It is           decided to venture outside of
                                            interesting that—as I had to work vir-
2020, there were a number of events                                                            St. John’s and see for myself
planned at the University of Regina         tually—I did not meet the vice-presi-
                                            dents in person until the end of June.             how Memorial University is
as a send-off, and events in April at
Memorial to welcome me, including           I realize now how important that per-              perceived by communities
a formal installation. Due to the pan-      sonal contact is, as you learn so much             throughout the province.
demic, all were cancelled.                  from watching body language and in-
                                            teractions. I found that chairing Sen-
I had to self-isolate for 14 days when      ate was also tricky, as there are close
I arrived in the province, so I left Sas-

                                                                                               I
                                            to 100 participants and I have not yet
katchewan early and set up in an                                                                    n early July, when Newfoundland
                                            built relationships with faculty.
Airbnb in St. John’s. I could work                                                                  and Labrador lifted some pandem-
from home anywhere, so I finished           As president, one of the things I en-                   ic restrictions, I decided to venture
my term at the University of Regina         joy immensely is walking through a                 outside of St. John’s and see for my-
while in St. John’s.                        campus, meeting faculty, staff and                 self how Memorial University is per-

                                                                                                           September/October 2020
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