Now is the time to act while we are not inundated by Covid-19. While our elected officials are still well. While the public is not in a panic.
Some examples of how every day our economy is grinding to a halt:
1/ Voisey Bay Shuts down its mine. Other mining operations will follow due to plummeting demand for commodities.
2/ Bay du Nord Project has been deferred. I would not be surprised if they started shutting down the oil platforms. West Texas Intermediate Crude is trading at $23.10 which is almost 1/3 of what the government projected it to be
3/ Most provinces and territories are declaring states of emergency and it is only a matter of time before the country follows PEI’s order for all non-essential businesses to close.
4/ Automakers shut down their factories in North America putting 150000 workers out of work. They are still being paid in the short term but it is only a matter of time before they have to be laid off.
5/ Retail stores and other businesses are shutting down. These are smart businesses. The ones that realize they need to protect their resources. These are the ones that have the best chance of still being there in 6 months to a year when things start to get back to a new normal.
I am trying to give our elected leaders some distance from the tough choices they need to make while at the same time pointing out that they need to make them. They do not want to be the bad guys. I am putting these necessary measures out into the public and taking the heat to provide them an opportunity to take bold and courageous steps. To set an example for the other provinces and even countries of the world on how they should be handling this.
All the economists and analysts are all doing the same thing. Being unrealistic about what is actually happening. I am not sure if they actually believe what they are saying or if they are afraid to face the realities. You cannot stop this virus no matter what we do in the next year. You have to let it run its course. Flattening the curve will save lives but it is not the panacea that we think it is. By April 11 the US will probably have 10 million cases and that number will keep doubling every 2-5 days thereafter.
We need to face this. The government cannot completely backstop the economy. The measures that have been announced by Minister Morneau were measured and smart. He:
1/ Provided support for the most vulnerable members of our society and took some pressure off business cash flow.
2/ He provided liquidity to the banks to give them a little more stability
3/ Never tried to stimulate the economy just assure the people that the government would be there to help them.
Municipalities like St.John’s, Mount Pearl and Paradise will see their revenues dry up for the following reasons:
1/ Most Businesses will not be able to make their quarterly property and business tax payments at least over the next 6 months or longer
2/ Most residents will not be able to make their property tax payments in August
3/ They will be forced to adjust their assessment values because the market value of real estate (Houses and buildings) has dropped because of the long term effect on the economy of this shock and it will not correct back to its present level for a long time.
They are not able to borrow to keep their operations going and therefore they need to join the provincial government and immediately:
1/ Cut all non-essential spending
2/ lay off all non-essential staff. Transfer their payroll to the EI system. Something is better than nothing. This would include entire government departments.
3/ declare a financial state of emergency and reduce the compensation to all essential staff by 20%
4/ The Province needs to establish a task force to help manage the economy including representatives from business, vulnerable sectors, labour, governments, police, and military, governments, police, and the military.
5/ The Province needs to appoint someone to be our Chief Economic Officer who will give daily reports to the people on the state of the economy. Just like the virus scaring them they need leadership at this time.
Take these steps now and have some control over the oncoming train wreck. Do nothing and realize the fall out will be much much worse.