Stephen Harper says his second stimulus budget must do more to get Canadians back to work, as weak Canadian and U.S. job numbers throw a curveball to policy makers planning to wind down deficit spending.
The government, which will soon enter its fifth consecutive year in office, is preparing what could be a politically defining budget as concern over unemployment grows.
With a tentative economic recovery taking hold, Ottawa is grappling with how best to create jobs to replace the hundreds of thousands lost in the recession. “The challenge now, as we believe we will enter a year where we see some recovery, is to make sure we actually get employment … going up,” Mr. Harper said Friday in St. Stephen. “I think Canadians recognize we've responded in a timely and effective manner to job losses across the country, including vastly increasing support for retraining and support for the employment insurance system. But clearly more has to be done.”
The Conservative government shut down Parliament until March in part, it said, because it faces a tricky economic task ahead and needs to “recalibrate” its agenda.
But the prorogation of Dec. 31 isn't stopping Liberal Leader Michael Ignatieff, who's trying to take advantage of the government's absence from Parliament to elevate concerns over unemployment to what he calls a “jobs crisis” in Canada.
Mr. Ignatieff told reporters at a news conference on Parliament Hill Friday that the Liberals will hold their own pre-budget consultations on unemployment, governance and the environment – starting precisely when the Commons was supposed to resume.
“Job growth is stagnant,” he said. “We're coming back to work. Not just show up for one day. … We will be working right through to the Olympics.”
Friday's December job numbers showed a slight drop, and employment is down 323,000 since October, 2008, when the losses began. Ontario's manufacturing sector is taking the hardest hit and is expected to continue struggling as a strengthened Canadian dollar hurts exports.
Having already ruled out major new spending in the 2010 budget beyond the second year of stimulus, the government is looking for ways to get the most out of the billions it has already pledged. The Tories are aided by the prospect that, as most economists predict, the impact of the $47.3-billion in measures announced in their 2009 stimulus package will be felt in 2010.
At the same time, the Tories are worried about keeping a lid on spending as they anticipate enacting a restraint program in future budgets to start whittling down the deficit. They're facing regular calls from various interest groups to make permanent portions of the spending in the two-year stimulus package.
Doug Porter, deputy chief economist at BMO Nesbitt Burns, said there's no “silver bullet” in programs that effectively spur employment growth. He said the best tack is sticking to the construction job-heavy infrastructure spending Ottawa's two-year stimulus package unveiled 12 months ago.
Mr. Porter said it's possible the Conservatives could also extend the popular home-renovation tax credit, which is currently keeping contractors busy.
“I don't think anybody's jaw would drop if they extended it,” he said.
Government jobs – primarily at the federal and provincial levels – were down 22,000 in December. The numbers reinforce a view recently expressed by Finance Minister Jim Flaherty, who told The Globe and Mail in an interview that attrition presents an opportunity for governments to save money on salaries.
The Canadian Union of Public Employees confirmed that “attrition downsizing” is the main reason for the job losses. President Paul Moist noted that stimulus dollars were directed toward private-sector contractors, while public-sector vacancies are going unfilled.
“I think this is a precursor to expected restraint budgeting on the part of the feds,” said Mr. Moist, who takes issue with the government's notion that a stimulus program can have a hard stop after 2010.
“We're missing out on opportunities for green jobs and sustainable economic development. … The country's dying for a long-term economic vision.”
NDP MP Glenn Thibeault said Americans have done a better job steering stimulus toward new, long-term jobs.
“What we're hearing more and more is this is a jobless economy,” he said, describing the government's program to retrain unemployed Canadians as a bust. “I don't think the Conservatives have ever really had a job-creation strategy.”
With a report from Tavia Grant
