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Flaherty: Economy 'getting worse month by month'

Blog by Shaun Kimmins | December 17th, 2008

James Wood, Canwest News Service  Published: Wednesday, December 17, 2008

“We’re facing a difficult year next year,” says Finance Minster Jim Flaherty.

Brett Gundlock/National Post“We’re facing a difficult year next year,” says Finance Minster Jim Flaherty.



SASKATOON -- The word was gloomy from federal Finance Minister Jim Flaherty as he began talks with his provincial and territorial counterparts Wednesday morning.


After a private dinner meeting of the ministers the night before, Mr. Flaherty spoke briefly with reporters before heading into the meeting at the Delta Bessborough with his provincial and territorial counterparts.


"The economic situation continues to worsen. I'm going to share some information from the private sector forecasters with my colleagues today that shows the situation is getting worse month by month," he said.


The meeting comes just over a month before an accelerated federal budget on Jan. 27 and Mr. Flaherty said he was looking for consensus support and partnership with the provinces on a stimulus package for the troubled Canadian economy.


"This is one country, after all, and I think Canadians expect all of us not to be partisan, to make sure that we pull together and create this kind of significant stimulus in the economy. I also hope to get advice from all of them on what else we should be doing and what else they're prepared to do because 2009 is going to be a difficult year for the whole country," said Mr. Flaherty.


There already appears to be a general agreement on the need for accelerated and expanded federal infrastructure investment as part of the stimulus package.


"It's just part of the whole story," said Manitoba's NDP Finance Minister Greg Selinger.


"For example, if you move quickly on social housing you get immediate employment, you use Canadian goods and materials and other forms of infrastructure helps you be in a better position when you come out of any recession to have a stronger economy So it works both short-term and long-term. We know there are a lot of good projects out there that are ready to go, we just have to flow the money as quickly as possible."


Ontario's Liberal Finance Minister Dwight Duncan said Canada is lagging behind in creating a stimulus package, which he said should also contain changes to unfair treatment of Ontario under the Employment Insurance program.


"Ontario is 40% of the Canadian economy. All Canadians have a vested interest in the economy and Ontario's success," he told reporters.


While there has been a focus on an estimated $3.4-billion potential bailout of the auto industry by the federal and Ontario governments, there will also be discussions on Wednesday for help of other ailing economic sectors such as forestry, mining and livestock industries.


Mr. Duncan said he's supportive of assistance for other sectors beyond the Ontario-based auto industry.


Mr. Flaherty also said he would discuss with "certain governments" on the issue of asset-backed commercial paper (ABCP) and might have more to say later in the day.


But he said potential government guarantees to restructure the non-bank asset-backed commercial paper market, which has been damaged by the credit crisis, would be less than the $10-billion figure that has been floated.


While there's great pressure on Mr. Flaherty to produce a budget that will help boost the Canadian economy in times of a worldwide economic crisis, the financial document may also carry the weight of the long-term future of Prime Minister Stephen Harper's Conservative government.


Mr. Flaherty's fall economic statement infuriated the opposition parties with its questionable projected surpluses, lack of a stimulus package and provisions ending the federal subsidy for political parties, and suspending the right to strike of federal employees.


While a makeshift coalition government-in-waiting was formed by the opposition parties to try and topple the Tories on a confidence vote, the Governor-General instead granted Harper's request for the suspension of parliament.


Talk of a coalition has cooled since the ascent of new Liberal leader Michael Ignatieff and Mr. Flaherty met with Liberal MPs Scott Brison and John McCallum to discuss the budget this week.


But an unpopular budget could revive the coalition, force an election or at least weaken the Conservatives.




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