Canada’s economy has deteriorated so badly since the federal government introduced its budget that more jobs have already vanished than the $40-billion stimulus was intended to create, the parliamentary budget officer says. Kevin Page told the House of Commons finance committee Wednesday it was not his place to recommend more stimulus spending, but did urge that the stimulus already announced be implemented quickly.
However, Liberal and New Democrat MPs on the committee said the government should at least consider improving benefits to Canadians who find themselves out of a job during the recession. Page’s latest report shows an economy that entered free-fall in the first quarter of this year and has wiped clean most of Finance Minister Jim Flaherty’s projections when he tabled the budget in January. “We think what we are seeing now is historic in terms of quarter to quarter decline,” he said. “The premium should be getting the stimulus implemented.”
Page noted that Flaherty had estimated the stimulus would save or create 190,000 jobs over two years, but that Canada has already lost 212,000 in the first two months of the year before a dime of the stimulus is spent. As many as 385,000 jobs will vanish in the first half of this year, he said. For all practical purposes, the government’s stimulus can only start being spent starting April 1. The budget officer, who is independent of the government, now suggests the economy will shrink at an annual pace of 8.5 per cent during the first three months of 2009, which would put him in line with Merrill Lynch economist David Wolf among the most pessimistic of near term decline. Over the year, the economy will contract by 2.5 per cent, he said, about double the budget’s estimate.