Business

Expect mistakes in stimulus spending: Flaherty

Finance Minister Jim Flaherty says the Canadian economy is in such dire straits he is prepared to risk making mistakes to speed economic recovery.
 Finance Minister Jim Flaherty says the Canadian economy is in such dire straits he is prepared to risk making mistakes and will rush stimulus spending so it can speed economic recovery.
Jim Flaherty projected a 1.6 per cent contraction of the Canadian economy

He says it's essential to get a portion of the $40-billion stimulus package in the budget spent soon after April 1, the beginning of the government's fiscal year.

"There will be some mistakes made, but it's worth the risk to help the majority of Canadians during what is a serious recession," he said. 

He said $6 billion in infrastructure projects contained in the January budget are moving through the system quickly.

"Stimulus for next year is not what we want, we need it now this year," he said. "This is urgent. This is an emergency situation of getting the stimulus into the economy to benefit Canadians, to benefit people who are going to lose their jobs and their families, and to benefit businesses."

Earlier this week, Liberal critic John McCallum questioned the government's commitment to quickly implementing the stimulus.

McCallum said he had received complaints from business leaders that Export Development Canada was stalling approval on loans, and noted that Ottawa had not spent all the infrastructure money in past budgets.

Flaherty conceded bureaucratic checks and balances are a problem, but said he believed public servants understand the urgency of the situation.

The budget projects the stimulus elements will create or save up to 190,000 jobs over the next two years if properly implemented, although parliamentary budget officer Kevin Page called such a prediction optimistic.

Last month, Statistics Canada reported 129,000 jobs vanished in January, the largest single monthly employment contraction since the agency began the survey three decades ago.

Other indexes have also come in lower than expected, including December's 5.4 per cent drop in retail sales.

And the bad news keeps coming. Statistics Canada said Wednesday that private sector investment will likely fall 13 per cent this year, with the biggest drop-off in the mining and oil and gas extraction industries.

The Bank of Montreal now believes the economy will contract by two per cent this year, below the budget's 1.6 per cent working premise.

Flaherty said he is comfortable that the budget's projection remains on target.

"So far, I'm comfortable where we are in our projections. We said this year, 2009, will be a difficult year and it is proving to be a difficult year."

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