September 11, 2020

By Mike Moffatt & John McNally

 

The damage that COVID-19’s dual economic and health crises have brought on Canada have been well-documented. Although the economy has started to recover, Canadians continue to face a lengthy period of economic turbulence ahead.

The federal government has indicated that spending on an economic recovery is coming, and that it will focus on investing in a green, inclusive and robust economic future. Doing so will not be easy, and requires thinking through different approaches to ensuring green spending supports inclusivity for people, households, communities and vulnerable groups.

 

A “he-covery” from a “she-cession”

From February to April, the economy lost more than 3 million jobs. Although a partial rebound is underway, with over half of lost jobs regained so far, a deeper look into this momentum points to troubling trends for equity. Updates to the Labour Force Survey in July allowed policymakers to better understand the impacts of the twin crises on different groups for the first time, unmasking underlying currents: Employment growth since May has been twice as fast amongst men than for women, a reality that does not help the group most affected in a “she-cession”.  Several groups, including South Asian, Black and Arab communities, are experiencing unemployment rates far above average. Youth unemployment rates increased from 10.3% in February to 24.2% in July. Persons with disabilities have endured extreme levels of employment loss and financial hardship. Since June, 59% of new jobs have been part-time, meaning the rebound has been fuelled mostly by returns for workers facing greater economic insecurity.

The variable between a recovery and a resilient recovery can be measured by how long growth and quality of life improvements continue consecutively once a recovery begins. Yet it’s unclear whether a recovery of any form is currently underway, since a partial rebound is not the same as a recovery. The authors of this piece, and the Governor of the Bank of Canada, have noted that the economy faces a long, extended climb back to normal. Things may yet descend before a sustained, prolonged recovery formally begins.

Yet when it does, embedding resilience into growth will involve using recovery funding to tackle two economic priorities the government has laid out: investments in a greener future, and supporting greater inclusivity. This is smart. A green recovery will allow Canada to invest in the technology and solutions needed to combat climate change, and drive clean prosperity in the coming decades. An inclusive recovery will help improve accessibility and affordability for Canadians, while ensuring the barriers for all groups to participate in supporting a recovery are lowered or removed. Ultimately, for any recovery plan to stimulate the economy when the time comes, it must find a way to create jobs and opportunities for those who have lost them. In this crisis, these people are disproportionately women, younger workers, persons of colour and persons with disabilities. Helping those most affected can prevent declines in overall household spending, lower the barriers to entry for returning to work, and free up valuable time for parents. Focusing on inclusion is not just the right thing to do ethically: it’s good economics.

 

Timing is everything

A great deal of thinking has been done about how to ensure a recovery supports the transition to a clean economy, gender and racial equity, and improvements in human health across Canada. This thinking is welcome, but risks getting a bit ahead of itself.

The lengthy climb back to consecutive periods of economic growth will take time. This provides the government with the breathing room they need to ensure they get this recovery right. Ensuring a green, inclusive recovery serves as a job creation engine requires careful consideration and forethought. Investment will need to be directed towards the areas where it offers the greatest value. Data is needed to understand the barriers present today that prevent a full return to work for the already vulnerable and disproportionately affected. An expansion of how a recovery is tracked is needed to ensure the coming decade supports progress towards the many targets voters have demanded Canada set.

This understanding can be developed, and measures assessed, during the climb back to an economic normal. This will allow for the development of a recovery package that, when the time is right, can put into practice the principles this nation has pledged to advance. This phased approach allows governments to separate a discussion about a green, inclusive recovery into two parts: The first will require designing policies during the climb period, and before a recovery begins. The second will emphasize implementing policies once the recovery begins and an understanding of where investments are needed is more developed.

 

A climb that lifts up everyone

Before the recovery begins, there are four steps that should be taken to ensure policymakers have the vision, data and accounting techniques that are needed to make a recovery resilient. Here are four recommendations for putting these ideas into practice:

 

1. Set quantifiable national goals that advance equity and inclusivity: There is no good justification why any community in Canada should lack access to clean drinking water, health care or a safe work environment. These goals, along with a host of others, should form the basis of a vision for an inclusive, equitable Canada that stretches to all three coasts. Investments in this country can then ensure they are helping it realize its vision for the future it aims to create.

Canada has already signed onto a number of national goals, notably to reduce greenhouse gas emissions to net-zero by 2050, and to implement the UN Sustainable Development Goals. Using these targets to set a vision for the country, and identifying how it will track progress towards meeting them, should be step one. Canada should base its vision off the 2030 Agenda National Strategy, building on it where needed, and outline how it will track progress towards achieving its goals using the indicators outlined in the Canadian Indicator Framework.

 

2. Ensure local action drives progress towards national objectives: A green recovery must ensure that all Canadians have access to clean air and clean water. It should ensure that a child growing up in any part of any city has walkable access to park and green space. It should ensure that a Canadian who purchases an electric vehicle is never too far away from a charging station to use it. But, without data, knowing where investment is needed to support these goals, and all others set in step one of this exercise, is impossible. Supporting an inclusive recovery requires a second step of understanding where the principles of inclusion (accessibility, affordability and equality) are not currently being realized in this country.

The federal government should begin by collecting data and mapping accessibility to essential infrastructure and services across the country. Data can be collected on electric vehicle charging access, clean water infrastructure, access to parks, and all other data needed to measure success using the indicators identified in step one. This data can be used to inform where investments should be directed to advance objectives, thereby allowing policymakers to target areas where local need is greatest in service of national goals. Data collection will also support deeper community engagement, allowing for a better understanding of what inclusivity means for each region across Canada. 

 

3. Account for the benefits of policies that make life better: Investments in green infrastructure, clean technology and improved accessibility come with a host of direct and indirect benefits. Some, like reductions in future greenhouse gas emissions, are obvious, but others are not traditionally accounted for in project assessments. One good example is that making school buses electric reduces the exposure to harmful air pollutants for children, thereby offering dramatically more benefits than a simple cost comparison between vehicles would suggest. A recent paper in the United States found that, far from being insignificant, co-benefits to human health accounted for 50-60% of all benefits brought on by the Clean Air Act from 1971-2017. This has enormous implications for equity, since it could unlock greater spending towards green projects that offer enormous benefits to human health and well-being.

The federal government should aim to assess and measure the suite of benefits to human health, improved accessibility and greater affordability that emerge from every recovery investment. Doing this will require understanding which co-benefits accompany which projects, and finding “win-win-wins” amongst options to ensure that green projects that put people to work are implemented in ways that improve everyone’s lives.

 

4. Remove the barriers to joining the clean economy for all groups: There is no guarantee that a green recovery will be inclusive by default. Many green recovery plans put forward rely heavily on creating jobs for the construction sector, an industry that has performed well over this recession and has a workforce that is primarily male. This is not unique to construction-related green jobs. The Brookings Institute has noted that in the United States "[t]he clean energy economy workforce is older, dominated by male workers, and lacks racial diversity when compared to all occupations nationally”. This is partially due to significant, and hidden, barriers to entry for marginalized and vulnerable populations. The presence of these often unseen barriers means improving accessibility in these positions cannot be achieved by simply earmarking additional training opportunities.

Ensuring that all people and Canadians, including racialized people, women, and persons with disabilities, have access to the employment opportunities that accompany a green recovery needs to start by understanding what might stop them from doing so today. The government should conduct a detailed assessment of the specific barriers to full inclusion in the green labour force for vulnerable and marginalized groups. This assessment should be followed by creating a Clean Economy Inclusive Workforce Playbook which would outline the steps necessary to ensure these barriers are overcome and the specific roles that each level of government, along with civil society groups must play to eliminate those barriers. Working on eliminating these barriers must happen in advance of recovery spending.

 

A recovery that lives up to the hype

Once these four steps are taken, and the recovery is underway, there are a number of policy ideas that can serve all three goals of creating jobs, investing in a cleaner future, and supporting greater inclusivity. Here are just a few examples of areas the government could examine to simultaneously achieve their objectives.

 

1. Make any licensed childcare space eligible for upgrades through the Climate Action Incentive Fund: The Ontario Chamber of Commerce has identified a lack of childcare as a contributing factor to the she-cession, noting “[f]amily care during COVID-19 has generally affected mothers more than fathers, and the burden has been greatest for diverse women. Racialized Canadians were twice as likely as white Canadians to stop looking for paid work or reduce time spent on paid work as a result of increased domestic responsibilities. Black and Indigenous Canadians were also more likely to say they suffered emotionally as a result of increased care work.” Making childcare accessible will be a key component of fighting the she-cession and can be made fully compatible with a green recovery.

 

Currently, under Canada’s current carbon pricing system, some of the proceeds are returned back to “MUSH sectors” (Municipalities, universities, schools and hospitals) to finance cost-savings and emissions-reducing efficiency upgrades. In order to ensure that childcare centres across the country, whatever form they take, are supported, the government should expand this “MUSH sectors” list to include efficiency upgrades and green investments into licensed childcare centres. This would rely on increasing funding and expanding the eligibility criteria for existing programs, and would lead to energy and cost-savings in the spaces where children are cared for.

 

2. Grow the Eco-tourism industry: The tourism industry has been hit particularly hard by COVID-19. In February and March, the sector accounted for 27% of all job losses in Canada. Tourism also has a workforce that is disproportionately young and female, groups hit hardest by the resulting economic downturn. As part of a green recovery, the federal government should enhance their Federal Tourism Growth Strategy. Ecotourism creates jobs and wealth in communities, and “provides effective economic incentives for conserving and enhancing bio-cultural diversity”. Despite Canada’s abundance of ecotourism industries, the sector is referenced only once, as a brief aside, in the Growth Strategy. The federal government should recognize that they have missed an opportunity, and work with the sector on a real, concrete growth plan.

 

3.  Create a Conservation and Adaptation corps: As of August 2020, youth unemployment sits at 23.1%. Young people suffer disproportionate long-term impacts from recessions, as the negative impacts early in their careers can slow future earnings growth and the development of professional networks. The federal government has taken steps to provide youth with opportunities that offer promising futures, recently funding 900 green internships through the Science Horizons Youth Internship Program. The government should go further, putting youth to work building the infrastructure needed to both achieve nature and biodiversity goals, and help Canada adapt to climate impacts. Creating a “Conservation and Adaptation” corps would offer the workforce needed to meet a number of environmental targets, including planting 2 billion trees, and could build the infrastructure needed to improve community resilience to climate impacts from flooding, fires and sea level rise. These opportunities would also provide youth with the skills and training needed to advance their careers in professions that are set to grow in demand in years to come. 

 

4. Prioritize energy efficiency retrofits in low-income housing: The households who spend the most on their energy bills are also those hit hardest during times of crisis. Prioritising low-income efficiency retrofits to 3% of households experiencing energy poverty annually could be done with a $2-3 billion investment.

 

5. Issue grants for young academic researchers: This crisis has impacted young entertainment and service sector workers more than any other group. With recovery timelines uncertain, many young people are uncertain about their future career paths as demand for professionals in green and care sectors is set to surge in the coming decade. Governments should offer additional grants for young workers to return to school, upgrade their skill-set or retrain in a new profession, and re-enter the workforce when a more fulsome economic recovery begins. This would prevent skills from decaying, improve accessibility to higher education, and ensure that another generation of young people was not forced to suffer through a “lost decade” of low quality jobs. 

 

6. Invest in zero emissions (ZEV) public transportation: In a pandemic created by an infectious respiratory disease, improving air quality in cities is a top priority. Switching out diesel buses, the dominant technology whose detrimental impacts on human health are well-documented, for cleaner electric ones has a rare ability to score a “quadruple win”: it would reduce greenhouse gas emissions, create jobs in Canada’s growing ZEV bus manufacturing sector, improve accessibility to public transit in cities across the country, and reduce air pollution concentrations cities, disproportionately helping vulnerable populations in the process. Increased transit availability will help Canadians, particularly lower-income Canadians access employment and job training opportunities.

 

7. Provide funding to municipalities to ensure cities are fully accessible to people with physical disabilities: COVID-19 places the health of the over six million Canadians who live with disabilities at greater risk. Given that persons with disabilities were already more likely to be underemployed, under-housed and socially isolated, supporting persons with disabilities is an imperative. One barrier to full participation in society and employment is a lack of accessible transit stations. While the Toronto Transit Commission must be fully compliant with the Accessibility for Ontarians with Disabilities Act (AODA) by 2025, commissioner Shelly Caroll has bluntly stated that “[w]e simply will not meet that 2025 goal without more partnership (from other governments)”. Given that municipal balance sheets have been devastated by COVID-19, the federal government will need to step in and provide funding so that cities and transit authorities can make the necessary upgrades. This will improve accessibility to essential services, and would increase the positive impacts of investing in ZEV public transit discussed above. 

 

8. Carve out specific grant funding within spending programs for SMEs: 32% of small to medium-sized businesses (companies with 500 employees or less) reported revenue declines of 20% or more in the first three months of 2020 (compared to 2019). Helping SMEs, who employ 70% of all Canadian workers, weather hard times will be all the more important as Canada’s transition to a net-zero economy continues. The federal government should boost existing loan-guarantee programs to support adoption of cost-saving upgrades and clean technologies across sectors. Since SMEs report that government funding is often difficult to access, support should be allocated through third-parties, like regional development agencies, local electricity and natural gas utilities, and industry associations, that can work directly with companies and entrepreneurs to get money where it is needed quickly.

 

9. Make it easier to claim the Climate Action Incentive: Low-income households are less likely to file their income taxes, meaning they pay the carbon price but do not receive the benefits upon filing. The government should increase filing assistance programs to help low-income earners claim the Climate Action Incentive, and improve the affordability of climate action.

 

Driving a green, inclusive recovery from the recession will require innovative ideas and policy thinking. During the long climb back to normal, governments across Canada should take the steps necessary to ensure spending is directed where it is needed most. They should also begin to think through how the challenges in implementing some of the more complex, transformative ideas for change. Canada’s recovery offers a generational opportunity to build a better future, and a better country. We should seize it. 

Mike Moffatt

Senior Director, Policy and Innovation

John McNally

Research Associate