Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Finance Minister Bill Morneau says Canada has an opportunity now to invest heavily given low interest rates. (Peter Power/THE CANADIAN PRESS)
Finance Minister Bill Morneau says Canada has an opportunity now to invest heavily given low interest rates. (Peter Power/THE CANADIAN PRESS)

The world believes deficit financing necessary to boost growth: Morneau Add to ...

Finance Minister Bill Morneau says there is a growing global perception that deficit financing is necessary to replace monetary policy as an engine of economic growth.

Mr. Morneau, accompanying Prime Minister Justin Trudeau to the World Economic Forum in Davos, Switzerland, has been conferring with fellow finance ministers and corporate executives about the need for stimulus spending to jolt a sluggish world economy.

“We have found that global perspectives on what we should be doing in an era where we have a challenge in growth are consistent. Making investments in our economy is the right thing to do,” Mr. Morneau told The Globe and Mail.

“We have an opportunity now. Interest rates are at historic lows. We can make significant investments, because we have that, plus an opportunity with our low amount of debt, especially in comparisons with other countries.”

Under the belt-tightening policies of the former Conservative government, Bank of Canada Governor Stephen Poloz was forced to drop interest rates to limit the negative economic impact of collapsing oil prices.

With the Liberals promising a significant stimulus package in the coming budget, Mr. Poloz held off lowering the central bank’s key interest rate on Wednesday, which financial analysts interpreted as a sign he is passing the economy-boosting baton to the government.

Mr. Morneau would not comment on Mr. Poloz’s decision to stand pat, but he said he hopes federal investments in infrastructure “will engineer long-term growth.”

“So what I hear from other people around the world is that this is the right initiative at this time, and we can make a difference for Canadians,” he added. Mr. Morneau did not elaborate on whom he had been speaking with.

In Toronto on Thursday, federal Infrastructure Minister Amarjeet Sohi said Ottawa is considering funding extensive repairs to buildings, pipes and other structures across the country to kick-start a “two-phased approach” to infrastructure spending.

In his first speech as minister, Mr. Sohi told a Board of Trade audience that the initial phase of the multibillion-dollar infrastructure spending plan would lay the foundation for the rest of the decade. He later added that the intention is to boost the economy this year.

Michael Sabia, who runs Canada’s second-biggest pension fund as chief executive officer of the Caisse de dépôt et placement du Québec, endorsed the Liberal deficit-spending plan, saying monetary policy has run its course.

“Monetary policy has supported us since the [2008] financial crisis, but now is the time to step up with a productivity-oriented growth strategy across a variety of countries, and infrastructure can play a very important role in delivering that,” Mr. Sabia said in an interview.

“Infrastructure is a key driver of productivity growth, and productivity is something this world needs.”

Mr. Sabia said global business leaders he has spoken to in the hallways at the World Economic Forum are receptive to Mr. Trudeau’s effort to rebrand Canada as a diversified economy with a stable and educated workforce.

When former prime minister Stephen Harper spoke at this forum in 2012, he promoted Canada’s then-gung-ho energy sector and the need to build pipelines to get Western Canadian crude oil to Asia.

“I think there is a change in the perception of Canada. I think it’s a positive change. I think it’s a breath of fresh air,” Mr. Sabia said.

Aside from a question-and-answer session with young “global shapers,” Mr. Trudeau spent the day making sales pitches in one-on-one private meetings with business executives, including General Motors CEO Mary Barra.

Economic Development Minister Navdeep Bains, who also spoke to Ms. Barra, said the government is urging GM to keep its plant in Oshawa open.

GM moved its Chevrolet Camaro operations to Michigan late last year, costing 1,000 jobs. The company has refused to say if the Oshawa plant, which currently employs 2,000, will stay in operation beyond 2017.

Even though Ms. Barra was told that GM could dip into Ottawa’s $500-million Automotive Innovation Fund, she was non-committal about the plant’s future operations.

“At this stage, when it comes to Oshawa, they are still determining the future of that,” Mr. Bains said. “GM knows full well we have the Automotive Innovation Fund in place. That’s a very important tool that exists that enables us to play a meaningful role in future investments.”

Mr. Trudeau also made investment pitches to B.K. Goenka, chairman of Welspun, one of India’s largest renewable-energy companies, and Joseph Jimenez, who runs pharmaceutical giant Novartis.

“You know better than most people here how Canada has a thriving pharmaceutical and biotech industry and is more than just resources,” he told Mr. Jimenez.

None of the business executives whom Mr. Trudeau has met over the past two days has made any firm commitment to invest in Canada, but Mr. Bains said the Prime Minister is building goodwill and relationships.

“There is so much global competition that when they have a relationship, when they have a level of comfort, it does go a long way,” he said.

Report Typo/Error

Follow on Twitter: @RobertFife

Also on The Globe and Mail

Trudeau aims to 'showcase' Canada at World Economic Forum (CP Video)

Next story


In the know

The Globe Recommends


Most popular videos »


More from The Globe and Mail

Most popular