OTTAWA — Parliament’s budget officer Kevin Page is forecasting that 100,000 more jobs will be lost this summer, adding there is no evidence that government stimulus has started to work through the economy.
The budget watchdog said the unprecedented $46 billion committed by Ottawa over two years to stimulate the economy won’t do much more than “soften” the recession’s effect.
But although the Stephen Harper government issued an update in June claiming “80 per cent (of commitments) already being implemented,” Page said it is unclear whether much has actually started improving conditions as yet.
“It’s probably too early to expect that stimulus would have a significant impact. It’ll be the fall before we start to see an impact,” he said.
“I think the government is providing information on commitments. When we get the data to see are the shovels on the ground . . . we’ll see the magnitude of the impact.”
Even if the stimulus works as the government hopes, the 190,000 jobs that Ottawa claims will be saved or created will pale to the 453,000 net jobs lost.
The projections on jobs and the economy were part of the budget office’s release of a five-year economic and fiscal assessment Wednesday based on the latest economic consensus for the recession and the anticipated rebound.
While the figures were leaked to reporters by members of Parliament who had received advanced copies earlier this week, the budget officer’s briefing offered some new insights and perspective on the numbers.
Page said the downturn is at least as bad, and in some instances worse, than what Canada experienced in the early 1980s and 1990s.
But in terms of the lasting impacts, today’s slump most closely resembles that of 1991-92 recession that took years to exit.
In fact, Page says the Canadian economy won’t return to full potential until 2014, by which time the national unemployment rate still won’t have returned to the 6.2 per cent average of 2008.
“The sad fact is that recessions are very nasty and they take years for employment to recover,” he said.
However, Canada is faring far better than most of its competitors, including the U.S., he noted.
The implications for the federal government are serious, with budgets deficits totalling $155.9 billion over the next few years and the government still stuck with a “structural” deficit in the $12-billion range even when the economy does return to full capacity.
The structural deficit occurs, said budget office officials, because the economic capacity of the country will have shrunk during the recession, partly through plant closures or cutbacks, and because of Ottawa’s phased-in corporate income tax cut to 15 per cent by 2012.
Page said the discrepancy between his new numbers and the January budget — which saw accumulated deficits totalling about $85 billion — is because the recession has been much deeper than anticipated earlier in the year.
The Finance Department’s new numbers for 2009, released with the update in June, are almost identical to the parliamentary budget office, Page said.
He said if the government were to project deficits out five years, it would likely come to the same conclusions as he has.