The trouble with the CERB

  • National Newswatch

The Government of Canada's CERB program has been a monumental feat: from inception to design to construction to execution, it was done by civil servants, politicians and political staff at lightening speed and with tremendous success.It has been a literal lifesaver for hundreds of thousands of Canadians. It has allowed them to pay rent, buy food and dozens of other things at a time of unprecedented difficulty and uncertainty.While the Government of Canada and most provincial governments have offered a myriad of different programs and supports to individuals, businesses and industries, CERB stands out as a shining accomplishment.Quite simply, CERB has been the single greatest argument in favour of the timely, positive role governments can play in the lives of its citizens in at least a generation.So what's the problem with that?Well, it has destroyed the arguments used by politicians and bureaucrats for decades that “it” can't be done. 
Simply put, Sir Humphrey Appleby would be appalled by CERB.As Jim Hacker - the bumbling protagonist in the always illuminating Yes, Minister - eventually realized “The three articles of civil service faith: it takes longer to do things quickly; it's more expensive to do them cheaply; it's more democratic to do them in secret.”These are not view unique to Whitehall. Public servants around the world learned from the Mother government. To the point that anyone who ever worked around policy development - regardless of partisan stripe - hears Hacker's words and grimaces.And to be fair, politicians and staffers are sometimes just as bad: timidity around uncertain outcomes, obsessions with polling and focus groups, targeted messaging and virtue signalling can all be just as much of a paralytic as bureaucratic inertia.But CERB has blown everyone's cover.If CERB can be done as well and as quickly as it has been, no one should ever accept the argument “it can't be done” ever again.And the first test of that assertion is coming up fast.Getting Canadians through the pandemic is necessarily only phase one of the covid19 response; restarting an idling economy will not be as simple as flipping a switch.In 2008/9 the Harper government spent billions upon billions of dollars insulating Canadians from the global recession. The money was almost entirely given to specific industries and “Economic Action Plan” -branded traditional infrastructure projects around the country. 
While the spending was necessary and basically did its job, it was a massive missed opportunity.Basically none of the money went to individuals. The Government became a huge investor in the world's largest auto makers. Airlines got cash. And every Tory riding in the country had new pipes, blacktop and, in some cases, gazebos.While it would always have been a crying shame on its face if the stimulus that's necessarily coming over the next several months was a repeat of 2008/9, CERB has proven there is no reason it has to be.First, this recession is not like 2008/9. Before covid19 escaped China there was nothing about the economy that suggested a serious recession was imminent. Stock markets were almost certainly due for a correction, interest rates were probably going to go up after years at record lows, and in Canada housing markets in Vancouver and TO were likely due for a cooling off, but that was about it.As the Bank of Canada, former Fed directors like Ben Bernanke and the majority of economists (including Canadians like Jim Stanford, Kevin Milligan, Andrew Leach and others) have said, this recession and recovery won't be a hockey stick so much as a “V”.There will be some ups and downs/fits and starts as regional economies reopen, but once people are unlocked the economy will recover relatively quickly so long as governments support that recovery smartly.As a result, when it comes to industry-wide bailouts I just don't think we're there yet. Between CERB, CEWS, rent protection and a host of other acronyms, businesses and their employees have money keeping them afloat. They need to take advantage of that money before asking for more. 
But beyond that, it seems imprudent to look at wholesale bailouts of specific industries. (A side note on the oil industry to follow).If we do get to the point that specific industries require broad stimulus or support, there should be some very substantial pre-conditions.Clearly, no company registered outside of Canada as a way of avoiding taxes should have access to a single penny of Canadian taxpayer's money. This should just be a sine qua non condition.Second, the focus needs to continue to be on individuals. I'm not always persuaded by the Trudeau government's incessant rhetoric about the “middle class”, but surely if its to mean anything at all the largest spending spree in a generation must benefit those individuals directly, not in some obscure, trickle down kinda way.(C)conservatives will always say a tax cut is the bestest, fastest way to get money into the hands of individuals. That's way too slow and necessarily will benefit way too few people (i.e., no one who's not working at the moment) to be effective right now.No, if industries are going to get bailouts - industries like the auto sector, the airline industry, the newspaper industry, cruise lines (though see the sine qua non above) it should be through individuals.Now that governments have proven themselves capable of smart, inventive, rapid program development and delivery, there's no excuse for them to not use the same approach going forward.Rather then buying shares in GM, why not allow individuals to pick the new car they want and get a $10,000 credit applied directly to the purchase price? Maybe $15,000 for an electric vehicle.This has a whole host of benefits that might best be described as “trickle up” economics: it means that dealerships, maintenance folks, parts companies and individuals all benefit from the stimulus. It also ensures that large corporations don't just increase their executive compensation or use the money to buy back stocks (as has often been the case).And once you do it for one industry, why not do it for all of them?Airlines want a boat full of money? Ok, once they've spent their existing cash and credit war chests (lookin' at you, Air Canada), why not create a program that provides every single Canadian (means tested, if you want) with a one-time $1000 voucher to use on any of the airlines to go anywhere they want?Newspapers have really reaffirmed the value of local reporting during the pandemic but are going to need support in one form or another to stay alive. Why not pay people to subscribe rather than providing bailouts to their HoldCos?One that's near and dear to me - want to stimulate new projects, new construction and new industries? Then don't invest in the same old ones you have for decades. Use the strength of the Crown to provide loan guarantees that let startups in a whole range of industries get past our incredibly conservative, risk averse, backwards looking commercial banks.This would be especially important for Canada's energy industry (told ya it was coming!).The incredible drop in the price of oil - fuelled largely by the decline in demand brought about by the pandemic but aggravated by a, ahem, measuring contest between Russia and Saudi Arabia - has surely exposed the risk of living in a one-horse town when someone can shoot the horse.Just ask cod fishermen.Alberta in particular is obviously going to have tremendous difficulty recovering its provincial economy until oil prices rebound (which they will) but Saskatchewan, Newfoundland and indeed Canada are very much in the same boat to varying degrees. 
Left to their own devices, however, it seems clear that provinces will not see the opportunity to diversify their economies this crisis presents. Humans are funny creatures.So the federal government should force the issue: billions of dollars to clean up abandoned gas wells that should have been the responsibility of the companies that made millions of dollars drilling them is fine to keep people working but its a poor plan for the future. 
We can do better.Some folks like my friend Ken Bossenkool have argued in favour of a “crisis basic income” during the pandemic based largely on the assertion that bad policy in good times can be good policy in bad times.Like me, those folks have been pleasantly surprised at how well government has done rolling out programs, especially CERB.Let's give them another chance: BDC is utterly hopeless but EDC, the Infrastructure Bank and the regional development agencies could do amazing things to create whole new industries - let alone a whole new generation of successful entrepreneurs - if they're allowed to follow the CERB example.I say we let them try.Jamie Carroll is a former National Director of the Liberal Party of Canada, now works in the renewables/clean tech space and is based in Calgary, AB.