http://www.windsorstar.com/business/Federal+cuts+eliminate+jobs+Report/8313400/story.html
Julian Beltrame, The Canadian Press| Apr 30, 2013 | Last Updated: Apr 30, 2013
- 6:10 UTC
The federal government's most recent "jobs and growth" budget will wind up
costing Canada both jobs and economic growth over the next few years, the
Parliamentary Budget Officer says in a new report.
The PBO's latest estimates on the impact of the 2013 budget handed down in
March show the cumulative impact will be to reduce economic growth by 0.12 per
cent and job creation by 14,000 by 2016.
Combining the latest budget measures with the cutbacks unveiled in 2012 means
there will be 62,000 fewer jobs in 2016, rising to 67,000 in 2017.
The PBO cautions the estimates do not mean the cutbacks will result in a loss
of jobs, but that employment will be lower than it might have been without the
measures.
In economic speak, that means that government spending will act as a drag on
economic growth, rather than a stimulus.
The report, released on the same day the government will table legislation to
enact the budget, notes that revised spending levels in the latest economic
blueprint will have a minimal impact on jobs this year and next.
But the longer-term effect is fewer jobs in 2015, 2016 and 2017.
The report also projects that the economy will grow at a slower rate than
Finance Minister Jim Flaherty counts on in the March budget - by 1.5 this year
and 1.9 per cent next year, compared with the budget estimate of 1.6 and 2.5
per cent respectively.
These revised estimates still will not undermine Ottawa's plans to balance the
budget in 2015.
In fact, the PBO calculates that the government will report an even bigger
surplus - $3.7 billion rather than $800 million - in the critical 2015-16 year
when the Harper government is due to face the electorate in a fall vote.
That's because it believes Flaherty has built in a bigger than needed fund for
downside economic risk, and because of rising employment insurance premiums.
"Based on PBO's current economic outlook and measures and revisions ... PBO
projects a significant improvement in the government's budgetary balance over
the medium term," the report states.
"PBO projects a budgetary deficit of $25 billion in 2012-13, which improves
over the projection horizon, resulting in a budgetary surplus of $7.6 billion
in 2017-18."
The lower growth profile will result in unemployment remaining above seven per
cent until 2016 and the Bank of Canada maintaining its current low interest
rate setting until the spring of 2015.
NDP finance critic Peggy Nash said the paper confirms what her party has been
saying all along about the budget, that by reducing spending, it will slice
into growth.
"Interestingly, the PBO says these measures aren't necessary to return the
budget to structural surplus," she said.
"This government is doing nothing in this budget to help exports, they are
doing nothing to stimulate private sector investment, they are hoping on a wing
and a prayer that consumers pile on even more debt and that keeps the economy
moving."
In an email response, Flaherty's office said the budget's aim is to support a
healthy economy during difficult global times, noting that Canada had created
900,000 new jobs since the 2008-09 recession.
"But we haven't followed the path of certain countries - spending endlessly and
creating a bloated government bureaucracy," the statement states.
"That would lead to the troubling consequences we're seeing in many European
countries, including growing government debt for generations to come."
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