Canada Needs a Real Economic Action Plan

Finance Minister Jim Flaherty is set to release the 2013 federal budget today, outlining the government’s spending plans and economic priorities for the year ahead. As has been the custom since 2009, the budget won’t simply be called a budget, but rather an Economic Action Plan. So what kind of action can we expect from this year’s Economic Action Plan?

As Flaherty is fond of repeating, Canada is still facing a fragile recovery in the midst of a global economy coping with the lingering effects of the financial crisis. For Flaherty, the fragility of the Canadian economy means that a return to stability and growth can only be assured through a commitment to balancing the budget. Flaherty claims to be “focused like a laser” on cutting government spending to achieve that goal.

A balanced budget has become something of a sacred priority in Canadian politics, functioning as an indisputable sign that the country is on track for prosperity and stable growth. In Conservative messaging, government spending is equated with waste, or a kind of creeping addiction that can only be held in check by ruthless cuts to government programs.

It’s a bit of an awkward communication strategy considering the Conservative record. Having inherited a $13 billion surplus upon entering office, Prime Minister Harper cut the GST by two points and slashed corporate taxes, drastically reducing government revenue. By the time the recession hit in late 2008, that surplus had nearly eroded, and would slide deep into the red as the government expanded stimulus spending to cope with the crisis.

Moving towards a balanced budget and securing their reputation as prudent fiscal managers is a top priority for Conservatives on the eve of the 2013 federal budget. But too often the goal of a balanced budget obscures the real challenges facing Canada—both when it comes to jobs and the environment.

Government expenditures are not merely wasteful largesse. On the contrary, a 2013 federal budget that included increased government spending, specifically targeted on expanding green energy infrastructure and jobs training, would serve two crucial purposes.

The first, more immediate purpose is preventing the Canadian economy from sliding back into recession. Across Europe, governments in thrall to the same balanced-budget dogma have been slashing spending despite sluggish growth and high unemployment. The predictable result can be seen in the UK, where major austerity cuts have put the economy on the verge of a triple-dip recession. Even the International Monetary Fund, long the leading international body calling for governments to reign in their spending, has admitted that budget cuts during a period of slow growth can end up further harming the economy and killing jobs.

The second purpose, though directed towards the long term, is no less urgent. In order to meet its obligations to both the international community and future generations, Canada needs to transition towards a low-carbon economy. This transition can only happen if the federal government steps up to provide the right combination of investment and incentives to the private sector. 

This was the message from the National Round Table on the Environment and the Economy, a federal advisory body whose $5.7 million annual funding was cut by Harper in the last federal budget. The reason? Their research consistently concluded that Canada’s long-term economic health hinges on making the transition from an economy dependent on polluting industries like the tar sands towards providing low-carbon goods and services.

The Canadian Centre for Policy Alternatives (CCPA) supports their findings, further arguing that the green economy has greater potential for long-term job growth than the oil and gas industry. Like the National Round Table on the Environment and the Economy, the CCPA outlines specific ways that the federal government can act to stimulate green economic growth and promote well-paying green jobs.

The environment is not a secondary concern, or something that can be addressed with an advertising campaign that bills the tar sands as “green." Canada needs a real economic action plan that puts the lives of its citizens ahead of balanced budgets, and promotes responsible green growth instead of feeding an oil boom.