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December 14, 2009 - Flaherty notes stimulus money flowing as recovery kicks in
Flaherty notes stimulus money flowing as recovery kicks in
By Nelson Wyatt
MONTREAL — Federal stimulus projects are starting to snowball just as the economy is recovering from the global financial meltdown, Finance Minister Jim Flaherty said Friday.
Flaherty says cash will flow faster in 2010 for federally funded construction projects, now that numerous engineering studies and environmental assessments are being completed.
“They are snowballing, if I can put it that way,” he said in Quebec City.
“They are gathering momentum as we go forward, as engineering studies are done, as environmental assessments are done. So there’ll be a lot of cash flow next year into the Canadian economy.”
Earlier this year, in the depths of the recession, Ottawa earmarked billions for infrastructure projects.
The opposition spent months warning that the money wasn’t going out quickly enough, while the government made procedural changes to speed up the delivery process.
The Liberals say Flaherty’s comments now prove the stimulus process encountered hiccups.
“He’s admitting that we were right all along,” Liberal critic John McCallum said in an interview. “Very little of the money has gotten out.”
He drew parallels with the government’s treatment of allegations of prisoner abuse in Afghanistan.
“This is a dishonest government,” McCallum said. “They told Canadians lies about (Afghanistan) detainees and about the infrastructure money.
“And then when irrefutable facts came out to demonstrate these were lies, they spin the story in a different way. In both cases, the facts now show that they were not telling the truth on infrastructure just as they were not telling the truth on detainees.”
He said it would have been possible to get the money out faster if the government had followed a Liberal plan to transfer gas taxes directly to municipalities, who would have been able to move ahead with already approved projects.
The finance minister, meanwhile, said there are encouraging signs that the recession is petering out.
“We have seen improvements in business confidence, certainly. We are seeing an increase — some increases — in private-sector investment, although we are not comfortable yet that we’re at a place where we can stop the stimulus measures,” Flaherty told a news conference.
“The job situation has also stabilized in the last several months, which is always encouraging.”
Dale Orr, a Toronto-based economic consultant, said Flaherty had “put a bit of flesh” on earlier statements which left the impression projects were going forward and there was immediate economic growth.
“The starting point for a lot of these programs is exactly what he’s now mentioning,” Orr said.
Douglas Porter, deputy chief economist with BMO Capital Markets, said Flaherty seemed to be sticking to his message “that there isn’t going to be a whole lot of new measures next year.
“In fact, next year’s budget may be extremely thin.”
Porter said one of the biggest criticisms of fiscal policy is that by the time the problem is identified and the money starts to be spent, the economy has already started to recover.
“This may well be a case where the maximum effect of the fiscal stimulus actually hits after the economy has started to emerge from recession.”
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