I think the only certainty we face with respect to 2022 is that we will face a great deal of uncertainty.
There will continue to be uncertainty about COVID-19 and the resilience of the health-care system, including our level of preparedness for future pandemics. There will be uncertainty about how the apparent labour shortage gets resolved. And, finally, there will be for some time uncertainty about the future of inflation.
First, what about endemic COVID and the longer-term impact on the health care system?
New variants of COVID-19 may well be similar to the flu. That is, the virus will continue to evolve so that an annual vaccination will be essential to protect the population from its worst effects.
The anti-vaxxers will eventually diminish in numbers and herd immunity will improve, but that will take time.
Meanwhile both governments and the health-care system will need to continue to push vaccinations, just as they have for decades with other nasty viruses such as measles and polio.
Developing strategies and policies to better prepare for future pandemics will, however, be a real challenge.
First, provinces have the primary responsibility for health care, but also face real budget challenges, specifically raising revenue.
No government likes to increase taxes to prepare for unknown threats, and trying to guess what sort of pandemics we will face in future is very difficult.
It seems to me we need a committee of experts from across the nation, their work to be financed by all provinces on a per capita basis. The committee’s mandate would be to develop a strategy on preparation and refine it through public debate before the provinces are asked to implement the recommendations.
The labour shortage is also a complex problem that will take time to resolve.
Over the last decade or so, the number of people retiring from the labour force has been rising as boomers age.
At the same time, the number of births has been declining, thereby ensuring this problem will be with us for a while.
Immigration can offset these trends to some degree, but we still need to focus on building the potential labour force.
One source is increased participation of women and this is where accessible child care is fundamental.
Governments, at last, have recognized this, but expanding care facilities will not happen overnight.
Further, Statistics Canada has estimated that over 600,000 individuals with some form of disability can be added to the labour force with the proper supports. It takes time to develop support mechanisms and to bring jobs and potential workers together, but it will happen as employers struggle to fill vacancies.
Finally, the fear of many, especially the Official Opposition finance critic in the House of Commons, is increasing public debt.
While his continual attacks on the Liberal government’s fiscal policies is, I believe, more a platform for political visibility than to propose effective alternative policies, there is no doubt that the Liberal government has engaged in monumental deficit spending in the last 18 months and appears to be planning on carrying on with such policies for this year.
This fiscal policy can be looked at several ways. First, I believe incurring the deficits of 2020 and 2021 was better than doing nothing. The cost of borrowing pales in comparison to the unemployment, business failures and rising poverty had those deficits been avoided to balance the budget.
The real challenge facing the federal government and the central bank is determining the resilience of the economy in the coming months. Shutting off support too early could shut down the recovery and make it all the more difficult to get back to fiscal health eventually
Misjudgements as to resiliency can have adverse consequences. The most obvious is continued inflationary pressures.
The problem is deciding when to take action and the normal tendency is to delay any action until there is greater certainty that restraint — rather than support — is the wiser policy.
I expect that Michael Sabia, the deputy minister of finance, and his crew — together with Bank of Canada Gov. Tiff Macklem and staff — will make the right call.
Hopefully Prime Minister Justin Trudeau and his cabinet will take their advice.
David Bond is a retired bank economist who lives in Kelowna.