Thank goodness for this opportune recession, even if it is still "technical," as Finance Minister Jim Flaherty insisted at a downtown conference yesterday. If it weren't for whatever it is, nothing would get done.
The legacy of good times lasting more than a decade is a mountain of unfunded priorities for public spending. It took recession, or perhaps only the vivid perception of it, to focus government attention on what it should have undertaken years ago.
Focus is too soft a word to describe the sudden conversion of our former fiscal conservatives to counter-cyclical spending. Yesterday, a previously dismissive Mr. Flaherty let the world know he was jumping into the pothole business with both feet.
Infrastructure spending "will be a key component of our future success," he told a conference on public-private partnerships, and a "key component" of his government's planned economic stimulus. Although ideological conservatives may worry about burdening future generations with unsustainable debt, real Conservatives are now committed to spending their way out of recession.
And nobody is cheering louder than the crowd that brought us collateralized debt obligations and credit default swaps. With the market for such innovative products seized up worse than a rusty Ford, government has become the only source of cheap credit for anything. Ergo, everybody loves infrastructure. Well-dressed converts flocked to Mr. Flaherty's speech yesterday like contrite sinners to a revival meeting.
Praise the Lord and get those shovels in the ground.
Only a month ago, Toronto Mayor David Miller resorted almost plaintively to Keynesian arguments in defence of the $1.6-billion capital budget he will formally introduce at executive committee today. If only he knew then how quickly the infection would spread, there would likely be a lot more spending to defend today.
A month ago, local conservatives couldn't decide whether the Miller infrastructure program was too lavish or too stingy. Typically, they condemned it as both - too stingy with construction projects they wanted, too lavish with those they disliked. In other words, the program is the typical unremarkable hodgepodge, dominated not by bold initiatives but deferred maintenance.
Even before the Conservative conversion to Keynesian fiscal policy, the city was more cautious than Ottawa about taking on debt to finance public works. It remains committed to spending no more than 15 per cent of property-tax revenues to service its debt, significantly less than Ottawa allows itself, but in fact it has never spent even that much.
Allowing for inflation, the amount the Miller government spent on public works three years ago, in the palmiest days, is the same amount with which it will now pretend to spend its way out of recession.
The biggest chunk of municipal spending - a $7-billion program to repair water and sewer works - doesn't even show up in the city budget. In contradiction to all principles of counter-cyclical theory, it is being financed not by debt but by a decade's worth of brutal rate hikes. The same conservatism ensures that the city will continue to maintain a backlog of more than $300-million in necessary road repairs.
So welcome, Mr. Flaherty, to the pothole business. Your newfound conviction is welcome in a city where even so-called progressives have forgotten the ancient virtues of big government.Report Typo/Error
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