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Are you Feeling Economically Stimulated Yet?

by Archives February 17, 2009

Over the course of the next year the Government of Canada will record its first deficit in more than a decade in an attempt to blunt the impact of the global financial crisis.
The budget, which passed on Feb. 3 with the help of the Liberals, will pump nearly $40 billion into the economy in hopes of counteracting lagging exports and rising unemployment. About half of the money will go to personal tax cuts over the next four years, the rest will be used for creating and protecting jobs and a series infrastructure projects, most of which are repair jobs, around the country.
With the words crisis being thrown around so much, one would expect a more of a response. Where are the cool new high-tech recycling programs, or major funding for public transit? What about pumping some much needed cash into the post-secondary education system or updating the century old water systems that exist below most major cities?
Our present situation is an interesting one; we’ve given our government the green light to spend as much as it takes to get us out of this crisis, but is spending along enough? If we look at history of stimulus spending in recessions, we find that major dollars often came with major initiatives.
For governments in the 1930’s this meant considerable investment in parks, building new bridges and, in a particularly enlightened approach to the national confidence, the arts. In the 1950’s it meant the creation of the interstate highway system in the United States and the Trans-Canada Highway in Canada. These are all projects that have contributed value to communities and the national economy far past their dates of completion.
Today, we have a keener awareness of how infrastructure needs to evolve to meet new challenges. We could be investing in environmentally friendlier modes of transportation and energy, better water treatment, more habitable communities. The deficit could be a carte blanche for new and progressive ideas if only there was someone willing to suggest them.
There’s a sad irony to the fact that our government hasn’t made any groundbreaking investments during the past decade of surplus budgets and is only now timidly entering the fray amidst calls of crisis. The new budget will be supporting clean energy technologies to the tune of $1 billion, a number I am sure we will be hearing environment minister Jim Prentice throwing around in the near future. But compare that to the $1.4 billion given to the oil sands development each year in tax breaks and it’s clearly not so radical. If you’ll forgive the expression – you can put make-up on a pig, but its still a pig. And these are still the same Conservatives that told us Canada was not at risk of a recession just a few short months ago.
There is no way out of this crisis without bleeding a little; how much blood is a matter of economic policy. What is at stake is an opportunity to live up to the reputation of a progressive nation we like to bask under.

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