Finance Minister Bill Morneau’s upcoming budget will include measures to deal with the immediate threat COVID-19 presents to the Canadian economy, while also focusing on the long-term need to transform the economy to adapt to climate change.

In a speech on Friday, Morneau promised support would be coming next week for Canadians who have to be quarantined to prevent the spread of the novel coronavirus and COVID-19, the infectious respiratory disease caused by the virus.

Morneau also said he would include a larger-than-normal risk adjustment in his budget — essentially a contingency plan — to make sure Canada has the fiscal firepower to respond to the virus-related slump hitting the global economy.

“We are continuing to monitor the impact on businesses and workers. We have the tools to respond quickly,” said Morneau.

Morneau also spoke of the need to position Canada as a global leader in the fight against climate change, which he called “the defining issue of our time.”

“There is no path forward for Canadian businesses that doesn’t include reducing their carbon emissions. Investors just won’t be there,” Morneau said on Friday. “For the energy sector, we intend on working together on approaches that reduce emissions and create more economic opportunities for the workers and businesses, including in the Prairies.”

A senior government official told CBC News this budget will make a start on answering a fundamental question: “What does clean growth look like in Canada?”

It will build on the message Prime Minister Justin Trudeau delivered recently to a mining conference about the need to find common ground on the path to reaching net-zero carbon emissions in 2050.

“We’re not anti-oil. We’re not anti-steel. We’re anti-carbon,” the senior official said.

The budget’s climate measures are expected to focus on three main areas: meeting emissions targets, helping the fossil fuel sector transform itself, and offering support to workers displaced by that transformation.

But the official cautioned that the budget will only be a starting point; Trudeau has said that consultations with industry and Indigenous communities will start in earnest in April on how to reach net-zero emissions by 2050 without crippling resource industries.

Both of these issues will land on the first ministers’ table next week, when the premiers come to Ottawa to meet with Trudeau. There will be political pressure on all levels of government to work together on a coordinated health and economic response to the COVID-19 outbreak.

But there also will be political tensions over the state of resource development in the country and outstanding provincial demands for larger cash transfers from the federal government.

The premiers — led by Alberta’s Jason Kenney — are demanding an overhaul of the fiscal stabilization program that would send billions to struggling oil-producing provinces like Alberta, Saskatchewan and Newfoundland and Labrador.

Mornreau agreed in December to review the program. So far, however, he hasn’t announced any changes to the program or sent any new money to the provinces.

Since then, Alberta has tabled a budget that projects a $6.8 billion deficit, while Newfoundland and Labrador Premier Dwight Ball announced that he would resign later this year once the provincial Liberal Party chooses a successor. 

A senior Newfoundland and Labrador government source said the province’s fiscal position was a big factor in Ball’s decision to step aside. The global commodity slump is hammering provincial revenues; the source said that Ball, who leads a minority government, wasn’t convinced he had the political capital to win support for a bad-news budget.

A second Newfoundland and Labrador source said the provincial government won’t table its budget until after Morneau tables his — and the province is counting on changes to the fiscal stabilization program.

All of these factors will test Morneau’s goal, expressed in his speech Friday, to keep spending to “practical and prudent” levels. The finance minister admitted that the coronavirus’s economic impacts “cannot be known, until they are known.”

Speaking Friday in Montreal, Economic Development Minister Mélanie Joly offered a sense of how the outbreak is hitting the Canadian economy in ways large and small.

“Chinese tourists have a $2 billion impact in Canada and we expect that to go down by $550 million by June,” Joly said. “To give you another example, the duty-free boutique at the Vancouver airport is down 50 per cent of its revenue.”

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