Prime Minister Stephen Harper shot back Thursday at a report that cast doubt on Ottawa's stimulus spending, defending his government's "unprecedented" efforts to pull Canada out of a recession.
Government officials have repeatedly insisted the $47.2-billion spending splurge was necessary and directly responsible for Canada's economy emerging from recession in late 2009.
But on Tuesday, the Fraser Institute, which champions free-market economic solutions, concluded government spending and infrastructure investment accounted for just 0.2 percentage points of the 1.1 per cent growth between the second and third quarters of 2009.
The report further asserts that stimulus spending played no role at all in the one per cent improvement between the third and fourth quarter, saying an increase in net exports was the main reason for that growth.
"First of all, that’s completely wrong and quite frankly contradicted by very serious work that’s been done [elsewhere]" Harper told reporters. "Economic theory and history is clear, governments must … make sure [funds] are put to productive use in the economy to create jobs.
"That is what we have been doing, that has been successful [and] every reputable international study says so, by the way, not just for us."
Long-term, he said the private sector has to take the reins for job creation, but he rejected outright any suggestion that government actions weren't directly responsible for pulling the country out of recession.
"If we had not done this … the recession would have been a lot worse," he said, citing studies from world bodies such as the International Monetary Fund and the Organization for Economic Co-Operation and Development to back up the claim.
Flaherty decried 'shabby' report
Finance Minister Jim Flaherty has also criticized the report's conclusions. "It's poorly done and it's wrong," he told reporters in a scrum after question period Tuesday.
Flaherty said the report fails to take into account the effects of the home renovation tax credit, the automotive stimulus program and the work-sharing program, which he said have saved more than 200,000 jobs.
"We added two points of GDP last year through the economic action plan," Flaherty said. "Consumer confidence is back at historically normal levels. So is business confidence in the first quarter of this year.
"I'm disappointed that the [report] is as shabby as it is," he said.
Read more: http://www.cbc.ca/canada/story/2010/03/25/harper-fraser-stimulus.html#ixzz0jDKvrFL9
Ottawa International Poets and Writers for human Rights (OIPWHR)
Replies