It didn’t get much coverage in the mainstream media, but last week the big banks told Federal Finance Minister Jim Flaherty to take his foot off the brake when it comes to public sector spending.
The banks argue with a weakening economy, now is not the time for restraint. That could mean pushing back Ottawa’s target to wipe out a $26 billion federal budget deficit by $5 billion per year.
“You won’t have many economists — or the bond market, which is perhaps a more critical vote — end up criticizing Canada if a couple of years down the road, instead of having a balanced budget, we have a $2 or $3 billion deficit,” CIBC chief economist Avery Shenfeld told the Toronto Star last week.
It’s a rare meeting of minds – the same message is being delivered by the Canadian Centre for Policy Alternatives, who argue economic growth is more important right now than the deficit.
Private sector economists are predicting economic growth in Canada will slow to 1.5 per cent for 2013.
If the economists left and right are telling Flaherty this, then Ontario’s Wynne government must be receiving the same message. This is important — if the provinces and the federal government are rowing in opposite directions, their initiatives would likely cancel each other out.
You can also bet that new Ontario finance Minister Charles Sousa – who emerged from the world of banking – is also listening to his former colleagues.
OPSEU Diablogue 