The Conservative government will release an accounting of its stimulus spending Monday showing 97 per cent of related infrastructure projects are under way. But, it is also warning that despite the slowing economy it is committed to turning off the taps on schedule and meeting its deficit-cutting goals.
Finance Minister Jim Flaherty, who will release the sixth status report on the government’s $47-billion, two-year Economic Action Plan at 11:30 a.m. in Montreal, said Sunday that the funding has allowed close to 22,500 projects to be started across the country. But while the minister acknowledged that “challenges in the American economy” will mean “moderate growth” and a “fragile” recovery in Canada this year, he reiterated that stimulus spending – which led to the biggest federal budget shortfall in Canadian history – cannot “go on forever.’’
Mr. Flaherty’s comments marked the second time in a week that he has framed the runup to a possible election as a choice between open-ended deficit spending by a “coalition’’ of opposition parties, and the government’s plan to cap the largesse that helped jolt the economy out of recession. While the government insists it isn’t seeking a fall campaign, Mr. Flaherty gave a fiery speech to the Canadian Club in Ottawa last Tuesday, claiming a coalition led by Liberal Leader Michael Ignatieff would be disastrous for the economy.
“We can’t afford to be tax-and-spend liberals now, and run deficits and go back to the 1970s and run up a big public debt and then use most of taxpayers’ money, or a good part of it, to pay down interest every year,’’ the minister said in an interview with Craig Oliver on CTV’s Question Period. “There’s a clear choice here.’’
Before leaving for Montreal to release the stimulus update, Mr. Flaherty is scheduled to appear in a photo-op this morning with Prime Minister Stephen Harper and four other ministers outside Mr. Harper’s office in the Centre Block of Parliament Hill.
The government has pledged to close the fiscal gap of almost $50-billion by the 2014-15 fiscal year, and the most recent numbers out of the Finance Department, from July, suggest that the economic recovery is helping them stay on course. The Conservatives will issue a full economic update later this fall, which NDP finance critic Thomas Mulcair said Sunday would likely serve “as another dry run’’ for the government’s election messaging.
However, the precarious economic picture south of the border has caused Canada’s growth to slow and provoked calls for the government to relax its use-it-or-lose-it approach to the infrastructure funding and consider whether to delay lifting a freeze on increases to Employment Insurance premiums.
Most infrastructure projects are being financed through a mix of municipal, provincial and federal money. Ottawa set a deadline of March 31, 2011, after which it would pull its share of any projects that haven’t been completed and leave the provinces, municipalities and private sector to foot the rest of the bill.
A report last month from Parliamentary Budget Officer Kevin Page warned that as of March 31, 2010, only 24.5 per cent of the projects approved as part of the two-year, $4-billion Infrastructure Stimulus Fund were complete, paving the way for a construction scramble and possible funding gaps early next year.
Liberal MP Gerard Kennedy has said there is no reason why the Conservatives could not be more flexible in responding to construction delays, accusing the Tories of wanting to “dine and dash” on their stimulus pledges.
On Sunday, Mr. Flaherty said the government is encouraging its partners in the projects to ensure that the projects are completed on time.
“We can modify some things as we go forward if it’s necessary to do that, but overall we have to stay on plan, stay on target to eliminate the deficit in the medium term,” Mr. Flaherty said. “We can do some modifications as we get to a balanced budget, but we have to keep the goal and accomplish the goal.’’
Mr. Flaherty was also non-committal when asked whether he might consider extending the freeze on EI premiums, which expires at the end of the year, or prolong benefits that run out next month for many long-term EI recipients.
“We’re watching carefully,” Mr. Flaherty said. “Over time, EI has to pay for itself. This isn’t a program we can allow to disturb the deficit and create debt over time. So we can review and we can look at it, and we’re watching the economy carefully.”
The issue is shaping up as another key political battle this fall in Parliament.
The Canadian Federation of Independent Business (CFIB) has warned that higher payroll taxes will cost 170,000 Canadian jobs, a number the opposition Liberals have seized on to criticize the government.
