On Saturday, Jim Flaherty will mark his fourth year as Finance Minister. But measured by job creation, it's as if time stood still.
In 2007, when the policies from Mr. Flaherty's initial budget began to influence the economy, about 16.9 million Canadians were working, according to the International Monetary Fund. The number of jobs at the end of 2009: about 16.9 million.
The state of Canada's labour market is a reminder that the budget Mr. Flaherty is now preparing will be much different than his first in 2006.
Back then, he and Prime Minister Stephen Harper had a surplus of more than $13-billion, a substantial cushion with which to test their general philosophy that the surest way to a thriving economy is lower taxes and minimal intervention. But along with destroying more than 300,000 jobs, the financial crisis also has wrecked the country's finances. The surplus is gone, replaced by a record deficit of $56-billion.
Those conditions make Mr. Flaherty's March 4 budget his most challenging yet.
A self-proclaimed and proud fiscal conservative, Mr. Flaherty's instinct is to retrench in order to reverse the deficit and resume paying off debt.
Yet the recovery is built on the shaky foundation of public spending and rock-bottom interest rates. Complicating matters further, industry groups and economists have a growing sense of anxiety about Canada's ability to keep pace in a post-crisis global economy where growth is centred in China and other Asian nations.
Those competing imperatives make choosing a theme for the budget difficult. There is sympathy for Mr. Flaherty's budget constraints, yet few want the government to retreat from the economy simply for the sake of a balanced budget.
“The time now is to be careful,” said Rob Hilborn, president of Toronto-based Darcor Casters Ltd., who was in Ottawa this week with other manufacturers to nudge officials to help smaller companies with growth potential get better access to capital. “In a period where we see the recovery is still on the horizon, it isn't time to throttle back either.”
