From China, Harper touts Canada’s economic report card

BEIJING — Stephen Harper and his financial lieutenant gave an economic pep talk from opposite sides of the world Wednesday, boasting of big-bucks stimulus spending but warning that Ottawa’s largesse would last only for a limited time.

Prime Minister Stephen Harper arrives to a news conference in Beijing

BEIJING — Stephen Harper and his financial lieutenant gave an economic pep talk from opposite sides of the world Wednesday, boasting of big-bucks stimulus spending but warning that Ottawa’s largesse would last only for a limited time.

The spendthrift effort to jump-start Canada’s economy can’t last forever, Finance Minister Jim Flaherty said during a speech in Winnipeg that was billed as showcasing the government’s latest economic report card.

“This plan was not created for eternal life,” said Flaherty, who warned that the stimulus money must be spent by the end of March 2011.

“This is a strict use-it-or-lose-it approach . . . .Temporary does mean for a limited period of time.”

The deadline, described by Flaherty as Ottawa’s first salvo in what promises to be a long, difficult effort to battle a $57-billion deficit, was the principal headline from an event that was largely upstaged by the prime minister shortly after he landed in China.

Some six hours before Flaherty’s event, Harper bragged that the government has committed to 97 per cent of this year’s stimulus spending, up from the 90 per cent it cited in September, and that about 8,000 of more than 12,000 approved projects are already underway.

“The economy remains our No. 1 priority wherever we are in the world,” Harper said of the odd timing of his announcement.

“When we travel abroad and promote Canadian business, investment and trade, that’s also a pretty important part of our economic action plan.”

Back in Ottawa, however, Liberal finance critic John McCallum was unimpressed.

“It’s full of weasel words,” McCallum said. “In terms of creating or saving jobs, it’s shovels in the ground and construction work that counts, not commitments.”

Just because over 90 per cent of the money has been committed, doesn’t mean people are actually at work, he said.

“They do not tell us how many jobs have been created. We know they know, because the municipalities are required to submit that information, but they won’t tell us.”

Government officials have said they do not track the number of jobs created by the stimulus program, even though one of the key goals of the program is to put people back to work. But the Liberals have produced documents showing that the government does collect such data — it just hasn’t released it.

The government says about $400 million in the fund earmarked for recreational infrastructure and under the communities component has yet to be approved, and that local authorities have until Jan. 29 to submit projects or lose the funding.

“Allowing the temporary elements of the Action Plan to wind down, as scheduled, is the first step in the government’s strategy for returning to fiscal balance,” the 168-page report states.

Flaherty said ending the stimulus effort by March 2011 would halve to $27 billion the projected deficit for 2011-12.

“When the time is right, when the economic recovery is clear and entrenched and if it’s necessary, we will determine the amount of spending growth restraint required to balance the budget,” he said.

“If we have to restrain growth in spending, when the time comes, we will find that restraint in the remaining $100 billion in federal program spending that is projected to grow at 3.3 per cent a year.”

While the report does not call for additional funding to stimulate the still stagnant economy, it offers a new wrinkle in allocating $205 million of the clean-energy fund to homeowners who retrofit their homes to save on energy consumption.

The quarterly updates on how the stimulus is working were part of an agreement negotiated with the Liberals last spring.

The release of the document was the only scheduled event on the first day of the four-day visit, seen by both sides as an exercise in fence-mending after four years of somewhat chilly relations.

Harper said he will be trying to improve and expand trade opportunities for Canadian businesses during the trip.

The visit comes at a time when the relationship has grown into Canada’s second largest, aside from the U.S., with about $53 billion in bilateral merchandise trade. However, it remains a lop-sided affair as Chinese exports about four times as much as it imports from Canada.

That element of the trip got off to a good start with the announcement that China is lifting the ban on imports of Canadian pork, a market estimated to be worth about $50 million.

A government official, however, cautioned against expectations of any major breakthroughs in the economic relationship.

Harper stressed the economic stimulus program his government put in place in last January’s budget is working, although he warned the economy remains “fragile” and could still be derailed by developments in the world.

“It is soon to let down our guard, too soon to adopt any radical change in economic direction,” he said, rejecting any suggestion that government stimulus is no longer needed.

On Monday, Statistics Canada announced the Canadian economy had begun growing again, but at a very low pace of 0.4 per cent during the third quarter.

That is a weak performance compared to most other Group of Seven countries, particularly the United States, which rebounded by 2.8 per cent during the same months.

It remains unclear to what extent the billions of dollars Ottawa says it has pumped into the economy has actually accomplished.

As with previous releases, the latest report makes no attempt to estimate how many jobs have so far been created.

The government says any delays in getting the money out the door has mostly fallen on shared-funding infrastructure projects, noting the elements of the stimulus plan controlled solely by Ottawa — tax cuts, improvements to employment insurance and the home renovation tax credit — have all been implemented.

In fact, it claims Canadians have been taking advantage of the tax credit to upgrade their homes, noting that renovation spending in Canada has increased 12.5 per cent and 11.5 per cent in the second and third quarters respectively. The credit refunds up to $1,350 on $10,000 worth of renovations.

— With files from Steve Lambert in Winnipeg

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