Canadian economists come out swinging against federal budget

Statement calls on the Harper government to stop austerity for ideological objectives

By Patrick Vaillancourt, News Editor

A number of high-profile Canadian economists and academics have come out against the federal government’s new budget, which was announced on February 11 by Finance Minister Jim Flaherty.

The economists signed a joint statement titled “Economists Against Austerity” which calls upon the federal government to increase public spending to jumpstart the Canadian economy and achieve a better rate of employment among Canadians.

The group calls on the Conservatives to “stop implementing fiscal austerity measures just to achieve its political goal of budgetary balance by 2015.”

The budget announced last week is thin on new spending, while much of the spending contained within it is from previously announced initiatives in last year’s budget.

The Harper government projects that they will run a $2.9-billion deficit this fiscal year, and are aiming for a surplus of over $6 billion by 2015, setting it around the time of the next scheduled federal election.

Some economists suggest that the Conservatives have already achieved a balanced budget, given that the projected deficit this year does not take into account a federal contingency fund of $3 billion. In theory, this gives the Government of Canada a razor-thin surplus this year of $100 million.

The Harper government is opting to wait until the 2015 budget announcement to proclaim that the government has achieved a surplus.

The group of economists, made up of political science and economics professors from across the country, states that the achievement of a political objective should not be the motivating factor behind stingy government spending.

“We believe that such austerity policy is terribly misguided. Not only are cuts in government spending completely inappropriate in the current context, but also the primary macroeconomic concern of the federal government ought to be the achievement of high levels of incomes and full employment for all Canadians, rather than the attainment of an elusive political target of budgetary balance that condemns the Canadian economy to remain stuck in a state of long-term stagnation,” says the statement.

The group cites that Canada has a sovereign currency which gives it the flexibility to spend for the betterment of the Canadian people, something that Eurozone countries only wish they retained and are just coming to grips with now.

“What is needed is a rise, not cuts, in public spending and the abandonment of the ideology of austerity.”

The Canadian Centre for Policy Alternatives and the C.D. Howe Institute are also in agreement that the budget is too tight to help the average Canadian family.