As much as Stephen Harper would like to put the reins on government stimulus spending, it should not be a shock that yet another fiscal pundit has weighed into the debate suggesting that Ottawa not be too quick to tighten or close the purse strings.
The PM said earlier this week that the economic recovery taking place in Canada is too fragile to risk a federal election this fall. Now, an economist from the Bank of Canada has taken that a step forward by saying industrialized countries like Canada may need more government stimulus rather than an exit strategy to rein in deficits.
After years of belt-tightening that brought a spiraling deficit under control, Ottawa did the right thing when when it announced billions of dollars in spending to maintain economic activity during a deepening recession. Canada’s Action Plan kept people employed during the recession and also addressed this country’s crumbling infrastructure by fixing countless highways, bridges and water and sewer projects.
BMO deputy chief economist Douglas Porter is urging Ottawa to be cautious because the wrong diagnoses at this point could result in disastrous consequences. While Canada’s economic recovery was strong earlier this year, things have slowed considerably and there are concerns around the globe that the worldwide economy could slip.
While this is not to suggest reckless spending, Ottawa, the action plan barely stratched the surface on infrastructure renewal. It’s a point the Federation of Canadian Municipalities made at its annual meeting in Toronto earlier this year. And now that there are numerous projects at risk of losing stimulus funding because they won’t be completed in time, Ottawa is refusing to extend the deadline.
As much as Ottawa wants to play the deficit card and wrap the stimulus package up, it would look a lot better if it continues to put Canadians to work fixing our crumbling infrastructure while at the same time making sure this nation’s economic recovery is not allowed to stall.
