The plan, according to Canada’s Minister of Finance Jim Flaherty, “is to stick to our plan.”
Flaherty made the blunt stay-the-course promise at a luncheon with the Toronto Board of Trade in a downtown hotel Thursday, Nov. 22, in a speech sketching out both the state of the economy and the federal Conservative government’s plans for the country’s financial future for the remainder of the term of office.
“We will not engage in large new spending schemes – we will not engage in spending that will increase deficits,” Flaherty told the crowd.
“The pressure to spend more is always there; I get many cards and letters at this time of year... many with interesting proposals for spending tax dollars. Many projects are good ideas but we have to keep our eye on the ball.”
In his speech, Flaherty referred several times to Canada’s strong economic position relative to other G7 countries. He said that indicated the Conservative government’s economic policies so far have been effective. He pointed out that Canada has recovered “all of the economic output lost during the recession,” and also increased employment beyond the losses from the 2008-2009 downturn.
He said that employment has increased since July of 2009 by more than 820,000 jobs — 390,000 over its pre-recession high.
“This is a volatile and uncertain global environment and the government is completely focussed on the economy, the creation of jobs and the creation of economic growth,” he said.
As a result, he said that “Canada is positioned relatively better than many of our peers in the industrial world,” he said. “I don’t say that to boast, but to say that our policies have worked and our positioning is good and we’re on the right track. We’re in a relatively good position.”
Flaherty said that Canada’s relatively sound fiscal situation has made it flexible enough to deal with external problems that might come its way – notably, the U.S. “fiscal cliff” of national debt that is so far stuck in a deadlock between Republicans and Democrats, and the European fiscal crisis.
“The threats are clear, and the most imminent threat is the so-called fiscal cliff in the U.S.,” said Flaherty.
“We’re not shy about making our position clear; the United States really needs to move forward with a medium-term plan to deal with deficits and the accumulated public debt. The consequences are a four per cent drop in real gross domestic product over the year – and that would have a continuing consequence for Canada and hurt our GDP. So we encourage them to move along, as well as wishing everyone there a happy Thanksgiving.”
If things do go poorly, however, Flaherty said that the federal government should be agile enough to protect Canadians’ interests.
“You want to be in the position of having room to move if bad times happen,” he said. “That’s why we did pay down that public debt. We did have to make a decision of running up the deficit in 2009 and 2010 but as part of the Economic Action Plan we always built in a plan to get back to balanced budgets and we’re on track to do that. We’ve gone from a $50 billion deficit to less than half of that, and it should get us back to a balanced budget during the current parliamentary term and certainly before the next election.”
Flaherty said the government won’t cut transfer payments to the provinces for health, education and equalization payments – and won’t cut payments to individuals. Rather, efficiencies will be sought through various direct programs offered by the federal government.
Flaherty and the Conservatives are launching budget consultations across Canada next week, to find out from Canadians what priorities they might like to see.