Canadian Economic News

A federal economic stimulus package will likely lead to a deficit in the $20-billion to $30-billion range for the 2009-10 fiscal year, a Prime Minister’s Office official told CBC News on Thursday.
Hours after the announcement, Harper confirmed in a television interview that the Conservative government was planning to take unprecedented action to stimulate the country’s economy.
“Some people are talking in the neighbourhood of a five to 10 billion dollar deficit. Our own assessment is frankly that will not be sufficient given the challenges we’re facing,” Harper told CTV News in a year-end interview.
“I think what will be more realistic in terms of the kind of stimulus our economy is going to need is going to be in the 20-billion to 30-billion dollar range.”
The figure includes the $5-billion deficit the Finance Ministry projected on Wednesday for the next fiscal year, the CBC’s Rosemary Barton reported from Ottawa.
It also includes funding for the planned $3.3-billion auto-sector bailout, as well as unspecified amounts for forestry, housing, job retraining and infrastructure investment, the senior official said.

On Wednesday, the Finance Ministry posted an update of Flaherty’s economic statement on its website:
“The level of nominal GDP is expected to be about $20 billion lower in each of the next two years. This suggests that revenues will be weaker than projected in the November statement,” the update said.
On Wednesday, Flaherty acknowledged that Canada can’t withstand the turbulence in the global economy.
He said three factors are affecting the economy: falling world GDP; an American recession, which the U.S. National Bureau of Economic Research officially recognized on Dec. 1; and a drop in commodity prices.
The deficits are forecast to occur even if the government proceeds with billions of dollars in asset sales and cost cutting that it has proposed. The projections also don’t take into account any money spent for a stimulus package to boost the economy.
The federal government hasn’t run a deficit since 1996-97. In the 2006-07 fiscal year, Ottawa’s surplus hit $13.8 billion

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December 15, 2008

Liberal MPs release letter to the Minister of Finance calling for answers on Canada’s economy
TORONTO - The following letter was sent by Liberal Finance Critic Scott Brison and Chair of the Liberal Economic Advisory Committee, John McCallum, to Finance Minister Jim Flaherty on Friday, December 12. The three will meet this morning in Toronto to discuss the budget, scheduled to be tabled in the House of Commons on Tuesday, January 27, 2009.

Dear Honourable Minister,
Canada is facing an unprecedented economic downturn and our foremost duty as parliamentarians is therefore to demonstrate to Canadians that we recognize the challenges they face and are prepared to provide solutions to mitigate the impacts of the economic hardship.
The Liberal Caucus recognizes the need to work cooperatively with all Members of Parliament but success requires both a sufficient level of trust and a shared vision on how best to achieve the desired result.
If the Liberal Party is to be actively involved in the budget process, the first thing the Liberal Caucus and all Canadians need to know is the true state of the government’s books. Meaningful discussion and input requires honest budgetary numbers. The government’s recent Economic and Fiscal Statement has presented many questions for which we need answers in order to proceed further.
Few economists believe the numbers in the Statement. In particular, growth forecasts are already much worse than when the document was written. Accordingly, we would like to see updated economic forecasts and their implications for the fiscal plan as well as a detailed reconciliation of national and public accounts projections.
We would also like to see substantially more detail on the government’s plan to generate savings of $10.1 billion over five years from the Strategic Review exercise and the Corporate Asset Reviews. We do not consider it fiscally prudent or credible to break generally accepted accounting principles and book asset sales before the sales have occurred. We also question the logic of selling government assets in a buyers’ market. With these concerns in mind, we require a detailed plan of which non-financial assets the government plans to sell and at what price. If this information is not available, we request that you remove the Corporate Asset Management Review from the Government of Canada’s fiscal framework.

In addition, we would like you to provide us with the information requested of your Deputy Minister by the Parliamentary Budget Officer on December 1, 2008 and December 3, 2008. We also request a full briefing from senior Finance Canada officials at which the Parliamentary Budget Officer would be allowed to attend.
The Liberal Caucus supports the implementation of an economic stimulus package over the next two years that would make sensible investments in infrastructure, key industries (like manufacturing, forestry and automotive), housing, and skills training. If we are to enter into greater detail on this issue, we need to know more about the scale and composition of the fiscal stimulus you are preparing for Budget 2009. More specifically, what scale of economic stimulus are you considering, and over what timeframe? And what specific measures are you considering in terms of new infrastructure investment, modifications to employment insurance and new tax measures?
We look forward to receiving the requested information by Friday, December 19, 2008. Upon receipt of the above, we will be able to consider what we believe are the best options for Canada at this time.
Respectfully,
Hon. Scott Brison, P.C., M.P.
Liberal Finance Critic

Hon. John McCallum, P.C., M.P.
Liberal Economic Chair
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NDP
Jack Layton’s nationally televised address
Wed 03 Dec 2008
My fellow Canadians, tonight we are at a crossroads in our collective history.
An economic storm unlike anything seen in a generation is upon us.
And Canada must have a strong and effective government that holds
the confidence of Parliament.
Tonight, we do not.
Tonight, far too many Canadians will lie awake not knowing how they’ll put food
on the table tomorrow, or pay the bills this month.
Seniors will check their pensions and savings and see the true cost of collapsing markets.
And in Canada this recession has only just begun.
Tonight, only one party stands in the way .
In Canada, New Democrats offered constructive input and good ideas.
On election night, I committed to working collaboratively with Mr Harper
in the new minority Parliament.
In the days and weeks following that election, I laid out our effective ideas
to stimulate the economy.
I described them in great detail in speeches across the nation.
In the House of Commons.
And in a face to face meeting – at my invitation – with Mr Harper on November the 12th.
I focused on the needs of working families, of those being thrown out of work or whose pensions were at risk.
Of those working in our key industrial sectors.
And the need for a new energy economy to create new jobs for the 21st century.
Instead of acting on those ideas –
Or presenting any plan to stimulate the economy –
He delivered a partisan plan to sell off public buildings, kill off opposition parties and roll back workers’ and women’s rights –
None of which would create one job or protect one pension.
Stephen Harper refused to act –
Now he is trying to turn an economic crisis into a political one.
However, Stephen Harper has broken trust with the Canadian people.
In addition, because of that, he has lost the confidence of Parliament.
He is more interested in his job than you are and your families jobs.
That is wrong.
Every Member of Parliament will be denied their vote.
Every Canadian will be silenced in the people’s House.
We will have a Conservative government without legitimacy.
That does not have to happen, because this is a remarkable moment in Canadian history.
For the first time in memory, the majority of the people’s representatives set aside their differences for the good of Canada.
This is a time of hope.
Tonight, only one party stands against the welfare of the Canadian people.
On Monday, the two leaders of the proposed coalition sent Her Excellency the Governor-General a letter making it clear that the majority of members of Parliament no longer have confidence in this Conservative government.
Nothing we have heard
tonight changes that fact.
Tonight, Mr. Harper had an opportunity to set a new course.
To accept some of the ideas we have put before him.
But Mr. Harper did not.
And tonight, we are announcing that if it pleases Her Excellency, every New Democrat Member of Parliament is prepared to individually express their lack of confidence in this government.
A new kind of government, with a new kind of politics, is ready to serve,
one that will put the economy and working families first.
Thank you, and Good Night.

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