Legislative Landscape Canada September 2020


This is John Schmeiser, CEO of the Western Equipment Dealers Association. Thank you for joining us for this edition of Legislative Landscape. The Canadian government has taken some significant measures in response to the Covid-19 pandemic and today, we would like to discuss the impact these measures have made on the economy.

There is a consensus of Canadian economic analysts that the robust Canadian relief provided through financial support announcements from the Federal Government is having the desired economic effect. Gross Domestic Product increased by 6.5% in June, a record, and another 3% in July.  We have also seen a decline in the unemployment rate across the country. Manufacturing jobs are on the rise and the price of oil and other commodities are up, indicating increased demand. We are also seeing the housing market rebounding, most likely elevated by extremely low-interest rates.

A full third of household income in the second quarter was from government transfers.  Canadians have budgeted the relief payments that were given to them and their disposable cash on hand overall is high, suggesting that as the economy opens to greater degrees, there is pent-up spending demand that will flow from this cash.  And with the highly anticipated Speech from the Throne coming with the resumption of Parliament, the Canadian government does not, apparently, plan to cut, in any drastic fashion, the stimulus into the economy. 

As of yet, new Finance Minister Chrystia Freeland has not discussed her budget strategy, so we will have to wait until the throne speech to find out whether the new strategy includes a Guaranteed Basic Income, a national pharmacare plan and/or a range of multi-billion dollar green initiatives. All of these initiatives would be costly – and Canadian will be asking can we afford them.

So what will need to be addressed in the future, is the massive amount of government spending that went into the Canadian measures.  While the government intervention is being touted for its short-term stabilization of the economy, paying for this record spending will eventually have to be realized.  The federal debt has risen from $685 billion in 2018 to an estimated $1.2 trillion this year. Prime Minister Trudeau has ruled out the prospect of raising taxes to pay for any new social programs so as this debt continues to grow, we can expect to see credit rating agencies downgrade Canada’s ratings. So the cost of borrowing is expected to go up.

As we discussed in our U.S. legislative landscape, the US Congress has not been able to agree upon additional stimulus funding.  Since the US elected to implement one-time relief, as opposed to the continuing relief approach taken in countries like Canada, additional measures must move through Congress as specific legislation.  While this has resulted in the US exercising more governmental fiscal restraint than Canada’s coronavirus relief, it also means that each measure becomes subject to partisan squabbling and gamesmanship. But long term, the approach Canada has taking of taking on more debt are the federal level will have more of a negative effect.

There is no doubt that the agricultural equipment market is fully integrated and travel restrictions have caused some issues. Last week, the Canadian government announced that it has extended the mandatory quarantine measures for international travelers entering Canada. Travel into Canada until at least September 30 will continue to be subject to a 14-day mandatory self-isolation period.  Travelers should not take this to mean that there has been any change in the state of the Canada-US border.  The border has been closed in 30-day renewable periods since March, and it currently remains closed at least until September 21. The US has “enhanced screening” for passengers arriving from certain countries in Europe and Latin America, but, on a national level, the only country that is subject to mandatory isolation is China. For Canadians that travel to the U.S. for business, they should be aware that some US states still have some restrictions on interstate domestic travel given the unevenness of infection rates throughout the country.  The restrictions remain most significant in the northeast states of New York, New Jersey, and Connecticut. 

The federal government has also announced a conditional deal with Novavax to secure 76 million doses of its COVID-19 vaccine that is under development.  The deal follows similar arrangements with Pfizer, Moderna, and Johnston & Johnston to provide vaccine doses, depending upon approval of the vaccines by Health Canada.  Canada has now secured potential supply deals for over 3 times the population of the country, presumably out of an abundance of caution that the vaccines may require more than one dose. 

One question political observers are asking is will Canada’s minority government be defeated in a non-confidence vote this fall after they present their Speech from the Throne. At this time, its too early to tell but a lot can change within a week. Newly-elected Conservative Leader Erin O’Toole has stated that bringing down the government this fall is not his priority, while Bloc Quebecois Leader Yves-Francois Blanchet has stated he will try and force an election if Prime Minister Trudeau, his chief of staff Katie Telford, and now former finance minister Bill Morneau did not resign in the wake of the WE charity scandal. The NDP has been silent on the issue but it expected the Liberals will try and cut a deal with the NDP to keep their support. For the government to fall all three opposition parties would have to support the effort.

With harvest in full swing for most of our member’s customers, I am sure that our dealer focus remains on serving our customer’s needs at this time. Thing’s will carry on in Ottawa like they typically do although we are not immune from the decisions that our political leaders take.

WEDA will continue our lobbying efforts on issues that impact our dealers and we will keep you updated as things progress. Before we close, a quick reminder to check out website – westerneda.com for updates on our advocacy efforts and other key industry information.  

If you have questions or concerns about this, or any other government affairs initiative, please do not hesitate to contact our office.

Podcast Host John Schmeiser


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