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Ottawa shouldn’t be shy about loosening the fiscal purse strings to bankroll much-needed infrastructure projects in order to revive the battered economy, says former Prime Minister Paul Martin.
“Nobody is in favour of deficits, but if you don’t invest at the present time, and probably for a substantial future ahead, you are going to enter into a term of long-term deficits,” Martin told BNN.
Martin’s comments follow reports that Prime Minister Justin Trudeau could back away from a campaign commitment to balance the public books before the end of his government’s four year mandate. Last week, Trudeau told Montreal’s La Press newspaper that the 2016-17 budget plan – which is widely expected to be released in late March – will exceed the previously announced $10 billion shortfall.
Martin says the state of Canada’s infrastructure is dire and Ottawa should focus more on the quality of the project and less on whether it will provide short term economic stimulus.
“When you’ve got a massive shortage of infrastructure, forget about whether there is a stimulus reason...you’ve got to spend on it. Otherwise you’re going to pass on a terrible mess to the next generation,” he said
Martin, who also served as Federal Finance Minister, says there are plenty of investment opportunities available, including Toronto’s aging transit lines, and funding more innovation in the health care system to address the aging population.
The Liberals are on the right track with support for infrastructure, says Craig Alexander, vice president of economic analysis at the C.D. Howe Institute. However, finding projects that both stimulate economic growth in the short term and add long term value to Canada’s economy will be a challenge, he tells BNN.
“This is the balancing act that the Liberals are going through. I think what they want is to invest in the right projects for the long haul, but there are a lot of calls for short-term stimulus particularly in economies that are contracting like Alberta’s,” says Alexander.