COVID-19 and the Nova Scotia economy

COVID-19 and the Nova Scotia economy

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Contributors:

Kent Roberts
Vice President of Policy
Kathleen MacEachern
Policy Analyst
Halifax Chamber of Commerce

Broad advocacy and support to rebuild and maintain the economy as the pandemic evolves.

The terminology has begun to shift as people and economies around the world continue to deal with the COVID-19 pandemic. The World Health Organization (WHO) has begun to drop the Wave 2 vernacular from their speaking points and has begun to talk about “continual management” as the current situation could be the “reality for years to come”. Terms such as “whack-a-mole” are becoming more mainstream, referring to the ability to aggressively knockdown outbreaks as they occur and rein them in. It is now the general belief that further outbreaks are inevitable and will have to be dealt with aggressively as they occur.

As the economy continues to reopen and schools begin, there is likely to be some level of increase in the number of cases. We will be living with this new reality and level of uncertainty until a vaccine is found and potentially longer depending on its effectiveness. The reaction and consequences of future outbreaks will be determined by their severity. Nevertheless, taking steps now, from both an action and policy perspective, could help mitigate the impacts of another outbreak, while preparing citizens and businesses for that potential is prudent. Our role is to help stimulate thought, advocate for our member community, and help government direct support where it will be most effective.

There does appear to be one item of consensus amongst economists and governments across the globe. As the pandemic persists, the very last resort is a repeat of the complete economic shutdown we saw in early 2020. Although, some countries have already begun to look at those extreme measures once again as the severity of the new outbreaks force governments’ hands. Covid-19 highlighted the fragility of our systems as well as the massive expense of propping up the economy while helping citizens maintain some level of economic stability. Interestingly, it also highlighted the glaring inequity in “value for work”, as poorly paid essential front-line workers became one of our most critical economic assets.

Early signals in Nova Scotia seem to suggest a different approach will be taken by the province and the health authority as we move into the fall. If the provincial Back to School plan is any indication, while light on detail, it appears the province will use a phased response based on the severity of an outbreak. Moving from everyone in school, to partially in school, to complete online learning. The key factor being the ability to quickly identify an outbreak, isolate it, and the potentially infected persons and quickly act on them rather than shutting down complete schools.

This would suggest a similar approach could be taken in the general populace in consideration of the general economic outcomes we need to maintain. From an individual business to an entire county or town, governments will need to have a rapid reaction plan in place with strict protocols to narrow the effect of an outbreak, so we do not have a repeat of the devastating consequences of Wave 1.

So, what does that mean for the organizations we represent, to the broader business community and the general populace. These three groups are of course not mutually exclusive, and overlaps will occur. As a business and not-for-profit advocacy organization, we will use a member-based lens first and foremost. But, as mentioned, many of these considerations will apply across the broader populace. We cannot also influence what governments outside our jurisdiction implement. But Nova Scotia can be a model of how it should be done and how businesses can proceed under these new conditions, by following reasonable protocols and having progressive policies in place.

Broad Protections

More than ever, consumer confidence is critical. If people are unwilling to leave their homes for fear of contracting the virus, we will not have the customers or staff to sell, make, buy, or consume goods. Early reflections on the opening of the Atlantic Bubble and most restriction-easing plans show complacency can be quick to set in and bad habits can return with a quick spike in cases (BC, Alta, Saskatchewan, etc.).

In the specific case of the Atlantic Bubble, it has been noted the requirements for interprovincial travel are confusing and ponderous. The standards are different for each province, and the follow up for people traveling in Nova Scotia has been limited. It is culminating in a very quick retrenching attitude, from the public and leading economists, that we are not ready to expand the Atlantic bubble to the rest of Canada, even though everyone is keenly aware of the economic consequences. We are a small economy. Canada is an incredibly small country economically, and having closed borders is not sustainable. This may mean measures, not popular with many people but are for the greater good, need to be considered.

  • Track/Test/Trace – Two well-known policy leaders recently penned a document titled “The Border Dilemma – How to Let People In, While Keeping the Virus Out.”* They highlight Public Health is the overriding consideration for every measure taken but economic and social welfare is closely behind. They also highlight collaboration and the unnecessary complication and bureaucracy that will be caused by different standards being used in each province. The Atlantic Provinces Economic Council (APEC) also commented that, while the Atlantic Bubble took too long to happen, the Canadian bubble may be coming too quickly as we cannot seem to manage the standards across the Atlantic let alone the entire country. The ability of government to mandatorily test, track, and trace will be uncomfortable for many but will be critical in pinpointing infection and minimizing the broad impacts of an outbreak. This needs to be a priority of government and they need to seek appropriate inputs of business while socializing the concept with the public now.
  • Mandatory masks in public spaces – Implemented by the province starting July 31st is certainly not a popular next step with many people but a necessary preventative measure that benefits everyone, especially if we are getting closer to an expansion of the Atlantic Bubble to all of Canada. What does this mean for the hospitality business? How will it be enforced? Many questions to be answered but acceptance of this new normal is critical, and education of the broader populace needs to continue.
  • Return to School – Hard for business to return to some semblance of normal if their employees must stay home to raise and home-school children. The initial response to the Nova Scotia Back to School plan has been mixed. Some parents are still very anxious about sending their children back to school even with the enhanced protective measures in place. But having healthy children and a functioning economy means a running school system. The protections are not absolute but provide a solid guideline to mitigating the risk of an outbreak in the school system. The extra burden it places on the system and the costs associated are not yet well understood.

Information and Communication

It became clear early during the pandemic that the very public faces of Premier McNeil and Dr. Strang were critical in giving people confidence that the management of the pandemic was in good hands. Combined with the Prime Ministers' daily briefing, these two public communications events became critical daily watching for Nova Scotians and Canadians. Confidence and comfort were important but equally so was the opportunity these briefings gave for the government to communicate critical information to large numbers of people. Governments of all levels as well as public-facing associations quickly adapted their websites and social media messages to rapidly disseminate critical information and call out specific COVID-19 programs and/or ages dedicated to the pandemic. Generally, programs were easily understood and applied for but there was an incredible amount of information to sort through for businesses and citizens alike.

Equally important to providing the appropriate level of supports to citizens and businesses was the input of information to governments. Governments cannot operate in a vacuum and expect to understand what issues are being faced. Governments must have rapid access to reliable information regarding the social and economic issues arising during a pandemic.

A potentially unique-to-Canada group was formed early in the pandemic to facilitate that input: Nova Scotia Business and Labour Economic Coalition (NSBLEC), led by the Halifax Chamber of Commerce. This group brought together over 200 economic thought-leaders from across the province, prompting Federal, Provincial, and Municipal governments to have senior representation at these thrice-weekly meetings. As stated specifically by one Deputy Minister, “We had been trying to form a group like this for years but we're unable to make it happen.” These meetings were mutually beneficial. Governments were able to share details of programs and announcements, while businesses, associations, chambers, and boards of trade from across the province were able to receive immediate clarification and provide timely input on arising issues or contemplated programming affecting people and businesses in their areas. The collaborative nature of the meetings and the information being shared was invaluable to the pandemic response.

  • While the briefing frequency from all levels of government has slowed, as the cases have declined, the necessity of maintaining some level of community briefing is critical until a vaccine has been found and the risk of a COVID-19 resurgence has all but been eliminated.
  • Maintain a central repository, a “one-stop-shop” at the provincial government for all things COVID-19 so that access and comprehension is clear for businesses and citizens alike.
  • Continuing the NSBLEC meetings, albeit at a reduced frequency, is critical to monitoring activity as the economy reopens so governments are aware of continuing issues or new issues that may be arising or are not addressed by current programming. Ensuring the continuity of this group would allow the frequency and scope to be ramped up and adjusted as the need arises. Potential exists to formalize, expand, and fund this structure to permanently support the gathering of critical information for government.
  • Ensure vulnerable populations have easy access to all levels of communication, both from a dissemination and collection standpoint. In the early days of COVID-19, these populations appeared to be not the primary concern of the policymakers. While efforts were made to correct this situation weeks into the pandemic, we must do a better job of inclusion and diversity of thinking as responses are considered and implemented.
  • Industry associations, Boards, and Chambers became key collators and disseminators of information for their members and the reach is significant across the province. Many of these organizations struggled to maintain services and staff during the pandemic. Priority should be given to ensure these organizations have the facility to maintain their operations and key communication tools during any further outbreaks.

Keep the Economy functioning

Another complete shutdown of the economy could be catastrophic for government, business, and the public. Government and all economic entities need to be thinking about how the reopening of the economy continues to evolve and how to keep the economy thriving in the event of another outbreak of COVID-19 or a resurgence of cases. Having processes in place to quickly identify and control localized outbreaks will be crucial not only for public confidence but to maintain a functioning economy.

While some level of working from home may remain after the COVID-19 crisis settles down or disappears, it is clear several months in having everyone working from home may not be sustainable in the long term. While several local and some multinational companies have started “working from home” is here to stay, even they may revisit the level of working from home they are comfortable with. We are not all created equal and some people are not suited to working from home. Many employees who initially enjoyed the experience are now reporting a loss of productivity and connectedness to the office, their workmates, and the work itself. While Zoom and other tools have been crucial to the functioning of business during the pandemic, people are tired of the format and are not getting as much from these meetings as they did initially and as they do face to face.

Outside of the pure productivity and social interaction reasons for returning to the office, the majority of urban economies are structured around servicing “offices”, with centralized business districts or downtowns. From office space to restaurants, bars, parking, printing companies, etc. this structure can be adjusted but not eliminated. There is no doubt offices will have to restructure the physical space to accommodate social distancing, and buildings will need to accommodate elevator protocols and new cleaning standards for example. And yes, this will take time. Businesses may move to split shifts etc. but most of Canada’s urban economies, where the bulk of GDP resides, need people to return to offices. There is also talk of a return to the ruralization of the office, where smaller office buildings and business centres will start to pop up in the suburbs, closer to where people live. The shorter commutes, the ability to split shifts with a spouse or coworkers, the mental benefits all suggest this could be part of the new normal, but this will take even more time and could have a dramatic effect on the cores of most urban economies.

  • In the short to mid and potentially long term, almost all organizations will need to adapt to some level of the new normal workspace. In the return to the office, what are governments in the Halifax Regional Municipality doing to allow for the safe return to work? How quickly are they looking to invest to make space changes and increase the numbers of employees in the urban core?
  • Nova Scotia health protocols have been adapted to allow for the opening of borders, the opening of schools, and even for the gathering of groups to hold meetings. Governments and the Health Authority must now look at adopting protocols that allow a safe but managed return to work. For example, with mandatory masks, is a one-metre space between cubicles an acceptable safety standard?
  • If work from home is an ongoing reality, how is productivity measured? How best to split time between the office and home to support the broader urban economy while ensuring the mental and physical safety of employees? HR will need to be well-staffed to train and be trained to manage this new type of employee.
  • Government and businesses need to increase the level of digitization they adopt so many more services can be accessed online without interruption. Permits, licensing, appointment booking, online ordering, and delivery, etc. are all part of the new reality of running a business and managing services for citizens.
  • If you accept the premise that there is no longer a Wave 2 but manageable spikes and outbreaks, then it is time to open the borders to broaden the economic reach of Atlantic Canada. Put the necessary, mandatory protections in place and open the borders.
  • On Wednesday, July 29th, Nova Scotia’s finance minister presented a budget update with a significant but not unexpected $800-million deficit, approximately. While the Minister referred to the need to now “spur the economy” and to find the balance between our health and economic stability, the deficit numbers do not reflect that balance and the economy is not bouncing back as quickly as anticipated. With almost a $500-million increase in spending due to COVID, almost $400 million went to Health and Wellness, while only a previously announced $50-million fund was allocated to help struggling business owners and entrepreneurs. No one is taking away anything from the need to protect the ongoing health of all Nova Scotians, but our economy had come to a virtual halt during the height of the pandemic, and there is no question that more support is needed to get it back on its feet. We hope this government chooses to act quickly to invest more in the economic recovery of the province. The ability of government to “live within its means” going forward and getting back to a balanced budget will largely be driven by increasing revenues to make up for the shortfall. There is no better way to drive HST and Corporate Tax revenues than by getting the economy back up and running. It is a case of invest now to drive economic growth or spend more tax dollars later to save sectors and businesses that are struggling to survive. And raising taxes at this critical time, in an already heavily-taxed province, will not help the business community or citizens recover and/or focus their dollars on job creation and consumer spending.

New Ways of Doing business

While COVID-19 has had a devastating impact on economies and people worldwide, some policy and program changes locally have caused people to sit up and take notice. What are the things we are doing now that have had a positive impact that we do not want to lose in the return to the new normal? And what are the broad policy initiatives that could now be timely and have a significant impact?

  • Direct, timely input to government policy and programs – Groups like NSBLEC have made an enormous impact on the creation, dissemination of, and feedback on new policies and programs. These vehicles need to be kept in place.
  • Quick, nimble, and sensible policy changes show governments can move quickly when needed. For example, allowing alcoholic beverage delivery with food take-out or allowing craft breweries to make home delivery and then deciding to make the changes permanent.
  • Telehealth has become a functioning health-delivery vehicle and should remain and expand.
  • In many economies, this pandemic has highlighted the need to revisit guaranteed basic income for all citizens.
  • Continued deregulation of the economy – For example, the immediate removal of interprovincial trade barriers could add up to 4% in GDP growth of the Canadian economy.

Targeted Supports

Governments reacted relatively quickly, both federally and provincially, to the financial operating needs of both citizens and businesses in the initial days and weeks of the pandemic. The investment was significant but certain things were missed or need to be revisited as we move forward.

  • Rent relief for tenants, both personal and business, was a continual and ongoing issue. Provincially, the eviction moratorium provided security for tenants, but the uptake on the rent relief program from landlords was not significant. What is the balance of tenant protection and landlord income and what are the policy and program implementations that meet the needs of both?
  • Due to the timing of the pandemic, spring heading into summer, it has become clear the hospitality and tourism industry has taken the brunt of the economic fallout. Even with the opening of the Atlantic Bubble, hotels are reporting a very small uptick in business and numbers reported as high as 70% vacancy as of the middle of August. Restaurants, with only 50% of their space available and even with increased outdoor deck space are reporting revenues at 40% of a year ago. As summer comes to an end, the deck space will also disappear. So, these numbers could decline further. One comment by a prominent hotelier was that their revenues will not allow them to pay their property taxes. Immediate supports are needed for this sector, including patient loan capital, property tax relief, incentives for citizens to get out and “staycation” and more broadly continued CEWS-type programs to enable these businesses to maintain a level of employment.
  • Municipalities do not have the legislative authority they need to provide tax relief, nor the tax base in many cases they need to maintain supports. Federally and provincially, governments need to ensure municipalities remain liquid during these times of reduced revenues. At the same time, the provincial government can give municipalities more ability to manage their financial relief measures for its citizens.

Skilled Workforce

A significant portion of Nova Scotia and specifically Halifax’s economic growth over the past several years has come from immigration, keeping our youth here and our burgeoning high tech/life sciences/ocean tech sectors. At the same time, while many of the Ivany goals have shown positive gains, the targets around the workforce attachment of underrepresented groups have not been achieved. And in the case of African Nova Scotians and Indigenous Nova Scotians, there has been a decline.

  • As restrictions ease, both Federal and Provincial governments must refocus on immigration programming to safely allow immigration to return to pre-COVID-19 levels. What are the current programs that can be restarted and what new programs will promote Nova Scotia as a safe and inviting place to come to?
  • The Halifax Innovation district including Onside, Volta, Halifax Partnership, NSBI, COVE, and others should be collaborating and working to ensure we maintain our position as an innovative economy and an amazing place to live and play, even under the umbrella of the ongoing concerns over COVID-19. Government must be part of this discussion to ensure the vibrancy of these organizations.
  • Key government, education, and NGO organizations in the underrepresented group space need to address the equity employment gaps now. Never has there been a more opportune and appropriate time to address the inequity and shortfalls faced by these groups. Nova Scotia has an opportunity to show true leadership in workforce attachment. Policy and programming changes need to be broad-reaching to effect rapid change, and the government needs to invest and show leadership to enable these changes.
  • The breadth and depth of Nova Scotia post-secondary institutions have been critical in attracting and retaining youth in our workforce. These institutions are facing critical financial and operational issues. It will be vital for the long-term economic recovery in the province that programs encourage the return of international students to Nova Scotia universities while pre- and post-graduate programming encourages these students to remain in the province.

This paper reflects a moment in time and as we know the world changes daily. The thoughts expressed here try to capture the collective thinking of our members, stakeholders, the broader Halifax and Nova Scotian community, and several local and national policy thinkers that have been expressed during the pandemic. We cannot possibly express the needs and wants of every group, but we have tried to isolate some critical policy and programming that needs to be considered as we all attempt collectively to move the economy forward under what will likely be a continuing period of instability.

COVID

For our Business Community

How many times over the past four months have you heard someone say, “the new normal”? Have you questioned what that term means? It is imperative for now that the “new normal” means “life with COVID-19". This virus is going to be with us for quite some time, so we need to learn how to do the things we enjoy safely, without risking the health of others. Countless individuals have been indirectly affected due to government-mandated closures for the benefit of the community. Businesses across Canada saw their revenues plummet, laid off staff in great numbers and many had to adapt their business model to fit the new rules. The government, at all levels, did step up to help, providing families with money for food, businesses with easier access to loans, and tenants the ability to remain in their home. But with the potential for further outbreaks, businesses must once again pivot and adapt as government funding might not be as readily available, and cooler weather may inhibit outdoor business spaces.

Many economists have told us a lockdown like the one we just went through would be, if not more, as devastating for our business community. We want our members to be prepared and economically sustainable until there is a vaccine and the “new normal” can maybe, just maybe, return to the original normal. That is why we want our members to ask themselves the tough questions. What would a renewed outbreak mean for their business? How do they continue to pivot and at what cost will this be? There are some factors businesses can control and some they cannot. Our goal in this space is to make our members aware of some of the factors businesses can and should be thinking about, even if another outbreak does not occur. This list is not exhaustive but gives you a good idea of what to think about now, as consumer confidence is on the upswing.

COVID-19 Adaptations

  • Did your adaptations or pivot benefit your business? If you didn’t or weren't able to pivot, what do you wish you had done? If your adaptions worked, try and determine if the same would be applicable come fall or winter. If you relied on patio space to make up for lost revenue, how will the change in weather impact your numbers? If you moved to full-time take-out and delivery, will road conditions affect the delivery ratios? Take time to write down your current adaptations. Would different scenarios affect the outcome of your pivot? If you did not adapt, this is a good time to find out what worked for other businesses and if they could work for you. A jurisdictional scan is a great way to find examples of COVID-19 business adaptions.
  • Did your employees work from home? Are they now back into the workspace? Working from home can be beneficial for some businesses, but not for others. Maybe a hybrid would work best for you. Does your physical space need to change to bring people back to work? Do you need to invest in people's home office? This is a great time to think about what is best for your business and employees and what could work if cases begin to rise. Ask your employees for their opinion. We’re sure they would be happy to give feedback and might provide new options to consider.
  • Did your product or service change? Is this something you can sustain? Is this something you want to sustain? Will this new product or service be needed when COVID-19 is finally in our rear-view mirror? What new barriers existed in getting your product to market? Is your business adequately digitized and ready to operate virtually? We know it could be months (or years) before we get a vaccine so this might be a good time to revisit your business plan and determine whether you should restructure and adapt to the new market or create a new long-term plan for your product/service.

Operating with COVID-19:

  • We know consumers want to know they are safe. Have you thought about whether your cleaning methods are sufficient for now to make it through a COVID-19 resurgence? Do you have enough masks, wipes, signage? These products may come at a significant cost. It would be a good idea to budget for them, and then if they are needed, at least you do not have to scramble to attain the cash.
  • Some businesses and offices are asking customers and clients to give their name and phone number to ensure business owners can use contact tracing if a case is found. While not all are doing this, many believe it will aid in our ability to allow businesses to remain open come an increase in cases
  • What might you also need to invest in that could allow your business to continue during an increase in cases? Do you need patio heaters, smaller or larger tables? What new scenarios will the cold weather create for your business? Will the weather impact your ability to clean? Stronger and harsher chemicals needed to kill the virus may cause unwanted odours as windows need to remain shut. Are there other cleaning products that do the same job without the potential for breathing troubles?

Communication:

  • Did you communicate with your customers? Did they know how you were going to keep them safe while still delivering their favourite products or services? Communicating your plans is one of, if not, the most important way to ensure you hold on to your customer base or create a new one. This might be as easy as updating your webpage, social media accounts, or answering machine greeting, or for some, it may mean creating a website or having a social media presence. There is support available for those businesses looking to create a website or leverage their social media as a marketing tool. Start with contacting the Chamber and we can, hopefully, point you in the right direction. As we wait and hope for a vaccine, we believe digitizing your business will be extremely important and, as we have seen for many businesses, help grow your customer base and sell products and services.
  • Transparency and accountability are vital to your communication plan. Ensuring your customers or clients know what you are doing to keep them safe is important but so is a plan in case of exposure. Tell people what will happen if a case is found in your business. Confidence comes not from only knowing you are doing all you can to keep people safe but also from being prepared for the worst-case scenarios.

We don’t know if a resurgence of cases will happen, but what we do know that some level of continued outbreaks will likely continue. In the US, states like California are moving back into “lockdown” as are countries like the Philippines because cases are once again on the rise. If that happens here, we could or more likely would see the demise of many of our businesses. Ensuring the government is prepared for what could happen is only half the solution. Businesses need to plan for what they can control and do, and for how different scenarios may determine new business adaptations or pivoting to survive until a vaccine can be found.

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