Title page
Contents
Executive Summary 11
1. Key Policy Insights 15
Vaccine rollout is underway 16
The economy is recovering, but the pace has slowed and risks remain elevated 21
Risks and uncertainties are elevated 26
Challenges for monetary policy and financial-sector stability 28
Ultra-accommodative monetary policy can, and should, be maintained until the economy is on an even keel 28
So far the crisis has not triggered household-debt problems, but risks remain 31
The growth of financing via high-risk corporate bonds remains a concern 32
Supporting the recovery while preparing the groundwork for reducing the public debt burden 34
Fiscal support for households, businesses and green investment is needed 34
Getting ready to tackle the debt burden in the medium term 36
Strengthening carbon pricing and re-orienting the tax system 40
Exploiting opportunities for public-spending efficiency gains 41
Eventually raising revenues, if needed 42
Nurturing recovery in the business sector 43
Further help for businesses is needed, including through better insolvency processes 43
Longstanding issues in product-market regulation remain, in particular non-tariff barriers to domestic trade 45
Ensuring low-cost, high-quality telecommunications services 46
Combatting corruption and money laundering 48
Giving greater profile to well-being in future policy-making 51
Reforming health care and welfare support 51
Health care: COVID-19 has underscored problems in long-term care homes 51
Addressing wage gaps and improving support for disadvantaged groups 53
Building environmental sustainability 56
Ensuring greenhouse-gas emissions reduction is on track 57
Main findings and recommendations 61
Bibliography 62
2. Improving the well-being of Canadians 64
How do we measure well-being, and what do we know about it? 66
The concept of well-being 66
The known drivers of individual-level subjective well-being 67
The determinants of country and neighbourhood well-being 68
The crucial role of social factors 69
Using well-being in the policymaking process 69
Canada's planned use of well-being in the policymaking process 74
Inequality and poverty as negative well-being markers 75
Canada ranks quite well in terms of equality of opportunity 75
Income inequality is close to the OECD average 76
Other dimensions of inequality: life satisfaction, wealth, gender and childcare 78
The pandemic has probably exacerbated inequality along various lines 81
What difference does a focus on poverty instead of inequality make? 82
The recent implementation of a national Poverty Reduction Strategy 83
Food insecurity as a manifestation of poverty 85
A basic income scheme is much discussed but would be expensive 86
Some less costly ways to confront poverty 87
The challenges relating to housing affordability and homelessness 89
Affordability problems are widespread and concentrated among those on low incomes 89
The federal government has implemented a National Housing Strategy 93
Options for improving housing affordability 93
Homelessness is a chronic problem with heavy well-being costs 94
Policies to deal with homelessness 96
The role of physical and mental health status in determining well-being 97
The relative importance of health outcomes in well-being determination 97
Waiting times have been a longstanding concern 99
The primacy of mental health in determining well-being 99
The role of health behaviours, especially problematic substance use 103
Policy options for improving the health and well-being of Canadians 105
The need to expand public insurance coverage to include pharmaceuticals 106
The lack of paid sick leave for most workers is unfair and risky 107
The quality of long-term care can be improved 107
The role of environmental factors in the quality of life 110
How does Canada rank according to these environmental indicators? 111
Government policies to deal with these major environmental challenges 111
The special case of Canada's Indigenous peoples and racialised populations 112
Indigenous peoples have long had poor well-being outcomes 112
Racialised populations are also severely disadvantaged in well-being terms 116
Main findings and recommendations 118
Bibliography 120
Table 1. Recovery will be pick up again 12
Table 1.1. The scale of monetary and fiscal support has been substantial 19
Table 1.2. Macroeconomic indicators and projections 25
Table 1.3. Possible further shocks to the economy 27
Table 1.4. Emergency support for the financial sector in the wake of the crisis 29
Table 1.5. Past OECD recommendations on the financial sector and housing market 33
Table 1.6. Illustrative fiscal impact of selected reforms 40
Table 1.7. Past OECD recommendations on fiscal budgeting, tax and spending 43
Table 1.8. Key federal-government business support measures during the crisis 44
Table 1.9. Additional federal support for hard-hit sectors and for environmental clean-up 45
Table 1.10. Illustrative GDP impact of selected recommendations 47
Table 1.11. Selected past key recommendations on business policy 50
Table 1.12. Federal-government support for households during the crisis: selected measures 54
Table 1.13. Selected past key recommendations on social, labour and welfare policy 55
Table 1.14. State of play in greenhouse-gas reduction policy (as of December 2020) 58
Table 1.15. Selected past key recommendations on energy and environment policy 60
Table 2.1. How Canada fares in some country well-being rankings 66
Table 2.2. Selected indicators of childhood and youth well-being 68
Table 2.3. National well-being frameworks across the OECD, selected countries 71
Table 2.4. Canada's official dashboard to track progress on poverty reduction, September 2020 85
Table 2.5. Homelessness in an international perspective 96
Table 2.6. Inequalities in life expectancy and hospitalisations for mental illness and suicide 98
Table 2.7. A cross-country comparison of waiting times 100
Table 2.8. How Canadian adults and youth assessed their mental health in 2019 102
Table 2.9. Inequalities in obesity, high alcohol consumption and smoking 103
Table 2.10. Selected indicators of comparative well-being of Canada's Indigenous peoples 113
Table 2.11. Broadband access by First Nations households by speed in Mbps, 2018 116
Figure 1. Canada's per capita COVID-19 fatalities have been below the OECD average 11
Figure 2. Output has followed a similar path to the OECD average 11
Figure 3. Canada's fiscal boost has been large 12
Figure 1.1. As elsewhere, recovery in output and employment is taking time 16
Figure 1.2. An end in sight for Canada's second wave of COVID-19 17
Figure 1.3. Canada has committed substantial resources to direct support measures 19
Figure 1.4. The support measures prevented an even deeper downturn 20
Figure 1.5. The recovery in output has weakened 21
Figure 1.6. Recovery in output and demand is uneven 22
Figure 1.7. The rate of unemployment is above the OECD average 22
Figure 1.8. Employment rates are still below pre-crisis levels, especially among young people 23
Figure 1.9. Consumer-price growth has been picking up 24
Figure 1.10. House prices have been rising 24
Figure 1.11. Exports by main destinations and main commodities 26
Figure 1.12. The policy rate has been cut to 0.25% 28
Figure 1.13. The Bank of Canada has been expanding its balance sheet 30
Figure 1.14. Household debt-servicing burdens have declined 32
Figure 1.15. The stock of high-risk bonds has grown substantially 33
Figure 1.16. The general government deficit has increased substantially 34
Figure 1.17. Automatic stabilisers are sizeable 35
Figure 1.18. Per capita carbon dioxide emissions from housing are high 36
Figure 1.19. Gross public debt has increased substantially 37
Figure 1.20. Net public debt 38
Figure 1.21. Ageing related pressures on public spending are relatively light 39
Figure 1.22. Environmental taxation is comparatively low 41
Figure 1.23. GST is lower than the OECD average 42
Figure 1.24. There is scope to improve Canada's insolvency system 44
Figure 1.25. Key components of product market regulations 46
Figure 1.26. Teleworking before and during the spring 2020 COVID-19 confinement 48
Figure 1.27. Perceived levels of corruption are low 49
Figure 1.28. There is still scope to improve the framework to fight economic crimes 50
Figure 1.29. Public support to pay for medicines is low 52
Figure 1.30. Selected green growth indicators 56
Figure 1.31. Greenhouse emissions have yet to begin a substantive downward path 57
Figure 1.32. The federal government has proposed increasing the carbon price to CAD 170 by 2030 59
Figure 2.1. Strong well-being scores on many fronts going into the crisis 67
Figure 2.2. The OECD Well-Being Framework 73
Figure 2.3. Many OECD nations have higher GDP per capita and less inequality than Canada 75
Figure 2.4. Social mobility in Canada 76
Figure 2.5. Disposable income inequality has been broadly stable at near OECD-average levels 77
Figure 2.6. Canada's middle-income group has shrunk more than most others since the mid-1980s 78
Figure 2.7. The dispersion of life satisfaction is relatively low 79
Figure 2.8. Inequalities in well-being indicators between men and women in Canada 80
Figure 2.9. Childcare costs and their labour-market incentive effects in Canada 81
Figure 2.10. Relative poverty is about OECD average despite less redistributive taxes and transfers 84
Figure 2.11. House price developments 89
Figure 2.12. Household indebtedness 91
Figure 2.13. The homeownership rate is near the OECD average but skewed towards the affluent 91
Figure 2.14. The size of the social housing stock is relatively low in Canada 92
Figure 2.15. Spending on mental health 101
Figure 2.16. Opioid availability and related deaths in OECD countries 104
Figure 2.17. Long-term care: number of beds, spending and staffing 109
Figure 2.18. Indigenous groups elsewhere face similar well-being challenges to those in Canada 115
Boxes
Box 1.1. All levels of government have been heavily involved in responding to COVID-19 18
Box 1.2. Evidence on the extent of house-price over-valuation 25
Box 1.3. Recent developments in international trade agreements 26
Box 1.4. Canada's inflation-target review and renewal process 31
Box 1.5. Measuring Canada's public debt 38
Box 1.6. Quantifying the fiscal impact of structural reforms 40
Box 1.7. Potential impact of structural reforms on GDP 47
Box 1.8. Canada's shift to teleworking during the pandemic 48
Box 2.1. Establishing a well-being framework: dashboards or an index of subjective well-being 70
Box 2.2. The OECD's well-being framework 73
Box 2.3. New Zealand's well-being approach to policy-making 73
Box 2.4. Canada's public measures of low income and the official measure of poverty 82
Box 2.5. Three options to confront the poverty problem through tax/transfer system reforms 88
Box 2.6. Indicators of staff shortages and low pay in Canadian long-term care institutions 108
Box 2.7. The environmentalist's paradox: improving well-being despite a worsening ecosystem 110