The increase in spending would be part of global efforts to boost demand in the world economy, Harper said today in Washington, following a meeting of heads of state from the Group of 20 countries. Canadian Finance Minister Jim Flaherty said in an interview with Bloomberg News that he may expedite fiscal measures planned for next year's budget.” As an American, this doesn’t seem like a very big deal – government spending in excess of its tax revenue base. But for Canada, it is. The Department of Finance titled Canada’s 2008 Budget “Responsible Leadership,” where the following are the Department of Finance’s top two priorities:
- Maintaining strong fiscal management and continuing to reduce debt. Planned debt reduction for 2007–08 is $10.2 billion, and a total of $13.8 billion over the budget-planning period (2007–08 to 2009–10).
- Carefully managing spending to ensure programs and services are efficient, effective, aligned with the priorities of Canadians, and affordable over the long term.
Canada’s Minister of Finance, Jim Flaherty, is an outspoken fiscal conservative. Earlier in 2008 he suggested that the 2007 tax relief package – worth 1.4% of GPD – was all the stimulus the economy needed. However, Flaherty obviously supports Harper on the fiscal package.
From Flaherty’s speech to the Empire Club of Canada and the Canadian Club of Toronto on October 29:
Ongoing, unsustainable budget deficits are quite rightly unacceptable for Canadians. These structural deficits must never return.
Yet also unacceptable is a devotion to surpluses simply for the sake of saying you've achieved them. That view refuses to take into account the long-term damage that can result from misguided attempts to balance the books during a historic global downturn."
Rebecca here. Even Flaherty, a fiscal conservative, supports a Canadian stimulus package supported by deficit spending. Global economies are moving toward a coordinated attack; expect further international fiscal stimulus announcements in coming weeks.