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  • Could skyrocketing private sector debt spell economic crisis? June 21, 2017
    Our latest report finds that Canada is racking up private sector debt faster than any other advanced economy in the world, putting the country at risk of serious economic consequences. The report, Addicted to Debt, reveals that Canada has added $1 trillion in private sector debt over the past five years, with the corporate sector […]
    Canadian Centre for Policy Alternatives
  • Betting on Bitumen: Alberta's energy policies from Lougheed to Klein June 8, 2017
    The role of government in Alberta, both involvement and funding, has been critical in ensuring that more than narrow corporate interests were served in the development of the province’s bitumen resources.  A new report contrasts the approaches taken by two former premiers during the industry’s early development and rapid expansion periods.  The Lougheed government invested […]
    Canadian Centre for Policy Alternatives
  • Canada-China FTA will leave workers worse off June 2, 2017
    Global Affairs Canada is currently consulting Canadians on a possible Canada-China free trade agreement. In CCPA’s submission to this process, CCPA senior researcher Scott Sinclair argues that an FTA based on Canada’s standard template would almost certainly reinforce rather than improve upon Canada’s imbalanced and deleterious trade with China. It can also be expected to […]
    Canadian Centre for Policy Alternatives
  • Faulty assumptions about pipelines and tidewater access May 30, 2017
    The federal and Alberta governments and the oil industry argue that pipelines to tidewater will unlock new markets where Canadian oil can command a better price than in the US, where the majority of Canadian oil is currently exported. Both governments have approved Kinder Morgan's Trans Mountain Expansion Project, but a new report finds that […]
    Canadian Centre for Policy Alternatives
  • Weathering the storm: is this the end of CRA’s political activities audits? May 5, 2017
    Yesterday, following a panel’s recommendation to allow charities more freedom to speak out, the federal government decided to suspend the Canada Revenue Agency’s controversial political activities audit program. Indeed this is good news for Canadian charities. Everyone at the CCPA is proud of the role our organization has played in challenging these audits and in […]
    Canadian Centre for Policy Alternatives
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The Progressive Economics Forum

Stay the course

The Fall Economic Update was hosted this week by the Fredericton Chamber of Commerce. It seems Minister Flaherty wanted to be sure of friendly faces when he announced that the 2012-2013 budget deficit will likely be $5-$7 billion higher than forecast in March. The reason for the higher deficit is that nominal GDP will be lower than expected, which in turn means lower government revenues.  Given that Europe has returned to recession and the US faces an austerity bomb, there are continued global risks to the Canadian economy.

Minister Flaherty’s message was, essentially, “stay the course”.  There is an unspecified plan that can be executed should the outlook worsen (likely more public sector cuts, as David MacDonald outlines here).

Public spending and public service cuts are probably the most counter-productive response in the current economic climate.  The Parliamentary Budget Officer estimates that the cuts announced in March 2012 will take 1% out of real GDP from 2014 through 2016, and result in 125,000 fewer jobs for 2016.  This all means that government revenues will be even lower than expected, prompting further belt-tightening.

This at a time when Canada’s debt-to-GDP ratio is the envy of other industrialized nations, and borrowing costs are at record lows.  If anyone can afford to borrow to invest in the future, it is Canada, right now.

What to invest in?  The Federation of Canadian Municipalities is calling on the government to invest in critical municipal infrastructure.  This is the kind of investment that puts people to work, makes life better, and improves labour productivity.  This is the kind of investment that businesses rely on governments to make.  A multi-year plan allows smarter and more productive investments.  Real Jobs and Growth kind of stuff.

 

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