Central bank governors are not normally known for being outspoken or critical of prevailing economic policies. Not the case, it seems, for Mark Carney and David Dodge, former governors of the Bank of Canada.
Mr. Dodge, in a report for the legal firm Bennett Jones, has recently warned against premature fiscal tightening in the current economic climate. Indeed, he and his coauthors advocate an expansion in infrastructure spending — in ports, roads and transit systems — among other things. Even though this will mean continuing fiscal deficits, they say that “in the current environment of low long-term interest rates, fiscal prudence does not require bringing the annual budget balance to almost zero immediately”. Such counsel flouts the current policy stance of the federal Conservative government, which is to eliminate the budget deficit next year.Read more
Finance Minister Jim Flaherty is said to be considering extending funding for public infrastructure investment in his forthcoming budget, as urged by the Official Opposition, the provinces and municipalities. Let’s hope, for the sake of jobs and the environment, this is a significant, long-term initiative.
On the eve of the 2013 federal and provincial budget season, public sector austerity is still the order of the day, even though the economy is rapidly slowing down.Read more
Bank of Canada Governor Mark Carney recently delivered a widely-publicized major speech in Calgary on the economic phenomenon known as the “Dutch Disease.” This was more nuanced than much of the media coverage.
Governor Carney argued that the booming energy and wider resource sector concentrated in Western Canada has provided a significant boost to the national economy, creating jobs in the rest of the country in both manufacturing and services. Overall, he said, high resource prices have been a plus for Canada.