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Published in the Huffington Post February 24, 2016
Now is no time to be slaying deficits.
Ever since Federal Finance Minister Bill Morneau announced Monday that the federal deficit would top $18.4 billion, all the familiar voices of right wing commentators, Bay Street analysts and Conservative politicians have made their all-too predictable calls for budget cuts and curtailed spending.
They couldn’t be more wrong.
Now, in fact, is the time for some strategic spending to get the economy going, even if it means increasing the federal deficit when the budget is handed down on March 22.
We can afford it. Canada enjoys one of the lowest debt to GDP ratios among all OECD countries. And, while deficits of $25 billion a year for four years would leave our debt to GDP ratio unchanged at 30 per cent, the average across all OECD countries is twice that.
So, we can afford to make some good, strategic and much-needed investments to get the economy going.
Ten years of neglect under the previous Harper government have left our infrastructure crumbling and our manufacturing suffering. Some 450,000 good manufacturing jobs were lost as the Conservatives ignored the needs of the sector and allowed Canada to become an exporter of raw materials to be processed elsewhere.
That left the Canadian economy vulnerable when commodity prices dropped. To turn things around, the federal government needs to step in. No one else is going to do it.
As Unifor said in its submission to the House of Commons Standing Committee on Finance last week, corporate Canada is sitting on $700 billion in cash that won’t invest – so we can’t count on them to stimulate the economy.
Ordinary Canadians, meanwhile, are drowning in household debt – and so not in any position to inject a dose of consumer spending.
That just leaves the federal government, which has two major areas in which to get things moving: infrastructure spending and support for strategic industries.
The backlog in repairs to our roads, bridges, water systems, schools, social housing, you name it, is so great that the money can start flowing right away and have an immediate positive impact.
Investments in public transit can also help Canada move towards a greener economy and meet the goals set at the Paris Climate Change conference last year, while improving accessible transportation for Canadians with disabilities.
To ensure maximum benefit from any infrastructure investments, there needs to be requirements for made-in-Canada materials and inputs, as well as local hiring initiatives – especially among vulnerable communities such as minorities, women in trades, young workers and Aboriginals. That kind of targeted investment just makes sense – after all, if we are going to make federal investments, we want to make sure we get the most out of them.
Social infrastructure investments such as health care, education and an expanded Canada Pension Plan, meanwhile, are the best way for our government to fight poverty in this country, something that is long overdue.
Countries around the world recognize how important it is to support their advanced manufacturing sector. In auto, that means a one-stop federal-provincial system to win new assembly and parts investment, ensuring that Export Development Canada’s top priority is attracting investments in Canada, and a cautious approach to the Trans-Pacific Partnership.
In aerospace, the federal government needs to support anchor firms, such as Bombardier, to get them through the turbulent period of bringing new products to market. Bombardier’s competitors around the world enjoy the support of their home governments, because those jurisdictions recognize that the money comes back in good jobs, and the taxes and investments those workers make in their futures.
The retreat of our government from the economic stage has hurt ordinary Canadians. With interest rates at historic lows and the need among Canadians great, now is the ideal time for the federal government to take an active role in stimulating the Canadian economy.
