Federal finance minister says low oil, dollar add to importance of stimulus

Shutterstock photo

DUGALD, Man.—Federal Finance Minister Bill Morneau said Thursday the low Canadian dollar and low price of oil make his plans for stimulus spending and tax cuts even more important.

Morneau appeared to hint that Liberal plans for infrastructure spending could be strengthened.

“With the slowing of the economy, we believe it’s doubly important that we take the correct actions to help Canadians to do better,” Morneau told reporters at a stop on his pre-budget tour of the country.

“We’re playing close attention to the price of oil, and of course that has an important impact on the Canadian dollar, which we’re also paying close attention to. In that context, we know that it’s doubly important that we think about how we can make investments that have an impact on the economy … and also think about how we can improve our long-term effectiveness as a country and to increase our long-term rate of growth.”

The Liberal platform in last October’s election campaign called for an extra $5 billion in infrastructure spending in each of the first two years of a mandate and $3.4 billion in each of the following two.

The Canadian Press has learned the government is now looking at moving up the spending schedule in response to worsening economic conditions.

Morneau has not provided any details, and has consistently said he is consulting with stakeholders and provincial governments as he prepares his budget, which is expected in March.

Morneau gave no indication the worsening economy threatens the Liberal government’s list of promises—everything from ending boil-water advisories in First Nation communities to cutting middle-class taxes.

Morneau is also facing demands from the provinces to boost transfer payments. Some provinces that receive equalization want the Liberals to remove a cap, imposed by the previous Conservative government, which limits growth in spending on the program to the national rate of economic growth.

He was non-committal on the issue.

“I had my first meeting with the provincial finance ministers in December,” Morneau said.

“We talked about the approach to equalization and transfer payments briefly. It’ll be a continuing topic of discussion.”