The G8 summitkicked off in Italy today and naturally the economy tops the agenda. As in the previous summits since the global financial meltdown began, Canada will present itself, and its economic record, as a shining example for the rest of the developed nations to follow.
Harper said this morningthat he will urge his fellow diplomats to see their first round of stimulus spending through before they offer more rescue aid.
“Before there’s talk of additional stimulus, I would urge all leaders to focus first on making sure the stimulus that’s been announced actually gets delivered,” Harper told a reporters today. “That’s been our focus in Canada and I would encourage the same priority elsewhere.”
The PM is right it’s best to let the billions in funds start working before countries cough up more cash but what Harper’s not saying is that it’s still going to be a long time before Canada’s own stimulus package really gets going.
A couple weeks ago I spoke to Don Drummond, TD Financial’s vice-president and chief economist ( check out the video), and he said Canada’s stimulus initiatives won’t kick in until after the economy has recovered, sometime in late 2010 or 2011.
In other words those billions of bailout funds the Conservatives have promised, and the other parties pushed for, are essentially useless in the short-term.
“We’ve had a collective memory failure,” says Drummond. “Fiscal policy always takes a long time before it hits the economy and that was why for a quite a long period of time it wasn’t believed to be an effective tool in the midst of a recession. I think we just overlooked that and what we really would have liked is for stimulus to come in 2009 and we don’t think much of it will.
“As the government said in its report card, a lot of money has been allocated, but that doesn’t mean its flowing,” he adds. “In many cases the infrastructure that was delivered in the budget has to be tri-partied funded you have to get federal provincial and municipal governments together and that will take a long time.”
So, while Harper should caution his cohorts to hold off on more stimulus funding, he might also want to figure out how to get his own dollars working faster.