Infrastructure cash injection a recession vaccine: cities group
The federal government can protect Canada's economy from a coming worldwide slowdown by ramping up infrastructure spending across the country, according to a group representing the country's cities and municipalities.
The Federation of Canadian Municipalities cited a study it commissioned that compared the stimulus impact of $1 billion in tax cuts to the same amount in accelerated investment in infrastructure projects.
Conducted last June and updated in October, the study contends that even a combined $2-billion tax reduction, either through cuts to personal or excise taxes, would produce fewer jobs and a lower economic stimulus than $1 billion spent upgrading roads, bridges and water mains across Canada.
The federal government already has a "powerful recession-busting tool" in the $8.8 billion federal Building Canada Fund introduced in the 2007 budget, but administrative delays have left close to $3 billion in Ottawa's coffers, said the cities group's president, Sherbrooke Mayor Jean Perrault.
"Our study shows that spending infrastructure dollars already in the federal pipeline would be a kind of recession immunization," Perrault said in a release Thursday.
Projects 'ready to go'
Perrault said there are hundreds of municipal infrastructure projects "ready to go" that can be financed from existing revenues once the construction season resumes next spring.
The study also says a $1-billion increase in infrastructure funding would create more than 11,000 jobs and grow the economy by about 0.13 per cent, while a $3-billion investment, if supported by matching provincial and municipal dollars, could create almost 100,000 jobs.
The release of the study comes ahead of Prime Minister Stephen Harper's meeting with provincial and territorial finance ministers on Monday to discuss Canada's plan to deal with the global economic crisis.
During the recent federal election campaign, Harper insisted Canada's economy is not going into a recession and offered what he called "modest, affordable" proposals to help Canada weather the financial turmoil.
The measures included $400 million more in loans over the next four years to help the beleaguered manufacturing sector in Central Canada, as well as a two-cent-a-litre cut in excise taxes on diesel and aviation fuel over four years.
Harper also lambasted his opponents' spending proposals, including Liberal Leader Stéphane Dion's pledge to spend $70 billion on infrastructure improvements, as unaffordable programs that would lead to deficits and could trigger a recession.