Canadian CEOs don’t think the federal government’s $47 billion in stimulus was money well spent. Indeed, they believe the main reason the government increased infrastructure spending was not because it felt it would be key to a recovery, but for political reasons.
A recent poll of Canadian business leaders conducted by Compas Inc. found that most respondents agreed with the latest Fraser Institute report saying that the government stimulus wasn’t responsible for boosting Canada’s GDP. Instead, the Fraser Institute credited investment in the private sector and increased exports for spurring growth. When the CEOs were asked if they agreed that federal infrastructure spending made no significant contribution to the recovery, the mean was 5.0 on a 7-point scale, where 1 means strongly disagree and 7 means strongly agree. The idea that the spending was essential to help Canada get through the economic crisis scored a mean of only 3.8.
In response to a question asking if, in general, tax cuts are more beneficial to the economy than government spending increases, most CEOs agreed, with a mean of 5.7. “I have never been able to spend myself rich,” said one respondent. “While the spending has helped those who got the work, I don’t know of a single person who benefited, although the debt left behind will be equally shared by all.”
Chief executives also felt strongly about the reasons Prime Minister Harper embraced generous infrastructure spending. With a mean of 6.0, respondents felt the public’s intense desire to see the government do something drove the cash flow. Those polled also felt that pressure from the G8 to co-ordinatespending influenced Canada, giving that factor a mean score of 5.3. Indeed, the CEOs felt that the least significant factor driving the stimulus, with a mean of just 4.4, was the Harper government’s belief that infrastructure spending would be the key to recovery. “Infrastructure spending likely has had little direct positive impact on our economy, however it was politically necessary and likely had a positive psychological impact,” said one CEO.