OTTAWA — The Harper government’s latest stimulus update trumpets billions of dollars spent, thousands of jobs created, and bulldozers across the nation kicking into overdrive, rescuing Canada from recession.
But just how the government reached those conclusions remains a bit of a mystery.
Finance Minister Jim Flaherty’s fourth progress report on the government’s multibillion-dollar stimulus program provides more details than previous reports. It states that close to 70 per cent of the $28 billion committed to stimulus this year is flowing into the economy, putting people to work.
But there are no signs the government has attempted to measure how many people are being put to work by the massive spending.
Rather, there is an assumption that by announcing 12,000 projects since January, the jobs and the economic recovery will automatically materialize.
Nor does the government include any assessment of how much economic growth is resulting from its spending efforts, where the growth will show up, or how the stimulus-fuelled growth will set the country on a permanent road to recovery.
“Our focus is on investment in jobs, now, and future prosperity. Our focus is on announcements of funding, so that proponents can get going,” explained Chris Day, spokesman for Transport Minister John Baird who oversees large chunks of the stimulus spending.
Announcements are racing far ahead of actual work. Of the 12,000 projects announced, the government estimates that 8,000 have actually started. It’s not hard to qualify a project to qualify as being under way. Any project put up for tender would count, even though that project had yet to create a single job.
The government also boasts that 97 per cent of its stimulus program has been implemented.
But the federal documents show that much of that 97 per cent is flowing all by itself. About $3 billion of that money is comprised of tax cuts announced in years past, well before the economy plunged into recession. Another $3 billion is employment insurance benefits that flow automatically to people when they lose their jobs. And another major chunk was given to bail out the auto sector.
Of the remaining funds, the government update shows what some municipalities and provinces have complained about all along: the money is not flowing quite as fast as hoped.
Instead of pushing out $3 billion in infrastructure spending to the provinces and municipalities this fiscal year, Ottawa is only going to be able to spend $1.9 million. The extra money has been put into next year’s budget instead
“It’s the facts catching up with them. Money is not getting out the door,” Liberal MP Gerard Kennedy said. “It’s the first crack in the propaganda wall.”
The Conservatives have made speed their top priority in the stimulus package, and frequently point to the briskness at which they are able to spend unprecedented amounts of money.
Provinces, however, don’t see the delay as a sign of failure in the stimulus package. Rather, they see it as a sign that, behind all the tough talk about “use it or lose it,” Ottawa may actually be somewhat more flexible than advertised, provincial sources said.
Prime Minister Stephen Harper and Flaherty have been adamant that all of the federal stimulus must be spent by March 2011 — and no extensions will be given. They reiterated that message on Wednesday.
But $3 billion was initially earmarked to be spent on building projects in the 2009-2010 fiscal year alone — a near impossibility for cities scrambling to rearrange their long-term capital plans and come up with matching funding themselves.
Provincial governments have been quietly lobbying Ottawa for an extension, arguing that spending $3 billion in a single construction season is unreasonable. The government relented on Thursday, allowing the unused portion of the $3 billion to be carried over into next year.
Now, the lobbying has already begun on trying to persuade Ottawa to show similar flexibility on its March 2011 deadline. Quebec has been making the case that money has been slow to flow to its municipalities because of municipal elections and other hitches in the funding arrangements.
And the Federation of Canadian Municipalities has served warning that they don’t want to get stuck with the bill if some of the projects aren’t completed in time.
“If any of these projects are delayed by facts beyond our control, that’s when we’ll take it up with other levels of government,” said FCM President Basil Stewart, who is also the mayor of Summerside, P.E.I.
Cities fear they won’t be able to handle the onslaught of projects expected next spring, as the spending deadline draws closer and the stimulus money increases. They wonder if they’ll have enough construction workers and materials to build their projects, without prompting prices to soar.
Ottawa has turned a deaf ear to those concerns so far.
The government imposed a new deadline for applications on Thursday. If municipalities and provinces don’t get their paperwork in order by the end of January and apply successfully for stimulus funding, they won’t get another chance, the update said.
Breathing down the government’s neck is the mounting deficit. If the government allows stimulus spending to drag on, eliminating the deficit in five years, as promised, becomes more difficult.
So the stimulus has to work quickly.
“The Economic Action Plan will help ensure that private sector economic activity returns as public stimulus comes to an end,” the update says. “This will help ensure the government will be able to return to balanced budgets as economic recovery takes hold.”