Flaherty’s update: Belief versus reality?
TheStar.com – Opinion/Editorials
Published On Wed Oct 13 2010
Jim Flaherty’s annual fall update – delivered Tuesday not in Parliament but at a business lunch in Mississauga — was full of self-congratulatory rhetoric about Canada’s economic performance.
“Canada is doing well compared to other advanced economies,” said the finance minister. “Canada’s fiscal situation remains one of the strongest in the world.” Flaherty also noted that, while Canada has regained all the jobs lost during the 2008-9 recession, “employment in the United States remains well below pre-recession levels.”
That self-assessment explains why Flaherty has decided to stay the course: his update contains no significant new measures, just restated commitments to wind up stimulus funding by the end of this fiscal year and to balance the budget by 2015.
But Canada is not an island, as Flaherty himself acknowledged. (“We are not immune to economic conditions outside our borders.”) And the economic recovery in the rest of the world – especially the U.S., our biggest customer — appears shaky at best right now.
Still, Flaherty remains unconvinced that a dodgy world economy should signal a change in policy. In support of his stay-the-course stand, he cited the Conservative government’s “fundamental belief” that the private sector must lead the return to economic growth.
That’s fine, if the private sector sees a market for its goods. But if those markets are drying up and Canada is slipping back into recession, the federal government may well have to intervene with some Keynesian stimulus. Flaherty and the Conservatives have done it before. Tuesday’s economic update suggests, however, that the government is deeply reluctant to do it again, for reasons that sound more ideological than economic.
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