Smoke and mirrors Canadian Federal budget big on employment rhetoric but limited on delivery: still excessive emphasis upon austerity some good ideas on infrastructure

The 2014 Federal budget was announced yesterday. There had as usual been a big build up to the budget by Minister Flaherty that obsession over budget balance would take a back seat to employment creation and infrastructure. But regrettably once we examine the fine details in the almost 500 page document we discover that the rhetoric is overblown and the program of job creation for young people who suffer from a close to 13 % unemployment rate is miniscule and will make no serious dent in reducing that rate and creating a substantial number of new jobs.

The budget reports a a very small deficit when measured against the GDP, which is actually a very large high employment surplus and even if we simply take into account the built in reserves in the budget is essentially a nominal surplus. It also goes to great lengths to explain how once certain methodological adjustments are made Canada’s unemployment rate is substantially below that of the U.S. That is true. But there is no time series presented showing what these rates were before the crash of 2007/08 so we can see how far above that level the prevailing rate of unemployment is. There are some clear and good programs of infrastructure investment laid out in the budget but the Government could and should have gone a lot further. Finally, unfortunately despite by their own admission Canada has the lowest debt to GDP ratio in the G8 and virtually no deficit, they still are imposing cruel and unnecessary austerity on government employees simply because they can politically get away with it. Finally both of the main opposition parties have made foolish deficit hysteria comments trying to blame the Conservatives for correctly having run a stimulative deficit in previous budgets. All in all a very unimpressive performance. 


About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
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