Flaherty warns delay in passing budget will hurt economy

Finance Minister Jim Flaherty says the country's economy is in too much trouble to allow partisan debates to delay implementation of the federal government's $40-billion stimulus package.

In a combative performance before the House finance committee Monday, Flaherty said Parliament must pass the budget he tabled last month before April or risk setting the economic recovery back.

"The first step is to adopt this bill quickly," he said. "This is not a time for business as usual."

Afterwards, he told reporters that Canada was being hobbled by the world slowdown and frozen credit markets that have put the country's economy in a tailspin, which he said will result in thousands of jobs being lost this year.

He said the budget not only includes infrastructure spending and tax cuts, but also puts in place a new $12-billion, government-led credit facility that will help free up loans to businesses to invest and create jobs.

"We need to create economic activity. We know the private sector is not doing so adequately."

Flaherty said sternly that he "expects" Canada's banks to work with Crown corporations, in particular Export Development Canada and the Business Development Bank, to ensure businesses get the credit they need to keep operating and expand.

"We have a serious access-to-credit problem around the world," he said. "We are going to have to, as a government, create more credit in the market so we can grow the economy."

It was a different Flaherty from the one that tabled an economic update only three months ago, preaching calm and proposing to cut spending in order to balance the budget. That document was dead on arrival and set off a political and constitutional crisis that took government out of action on the economy for two months.

Although he was urging quick action Monday, however, opposition MPs questioned whether the government is acting on its words.

Liberal finance critic John McCallum said he has been told by several business leaders that the EDC is dragging its feet on extending loans.

And NDP critic Thomas Mulcair accused Flaherty of playing politics by placing restrictions on public service increases and seeking to change pay equity rules, changes he said were ideological in nature. The minister was also grilled for repealing a provision he had previously introduced designed to stop business tax havens.