Jim Flaherty claims that his budget is about "jobs and growth." Parliamentary Budget Officer Kevin Page makes a much stronger counter claim. He reports that, while the Harper government's cutbacks will result in a balanced budget, they will create significant drag on the economy:
The spending restraints and cutbacks will reduce economic output by 0.3 per cent this year, climbing to 0.88 per cent in 2014.
Canada’s economy, subsequently, will grow by only 1.6 per cent in 2013, eight tenths of a point less than forecast by the Bank of Canada and the private sector consensus.
On the jobs front, restraint will result in about 18,000 fewer jobs this year than had there been no restraint, climbing to 108,000 fewer jobs in 2015. Most of the losses are due to Ottawa’s actions — including a reduction of 43,000 stemming directly from March’s spending reductions — although provincial restraint is also a factor.
Unemployment, currently at 7.2 per cent, will climb to 7.9 per cent in 2013, the report predicts.
Mr. Flaherty and Mr. Harper have been urging Europe to do as they do. But on the subject of European economic management, Paul Krugman wrote last week:
This is, not to mince words, just insane. Europe has had several years of experience with harsh austerity programs, and the results are exactly what students of history told you would happen: such programs push depressed economies even deeper into depression. And because investors look at the state of a nation’s economy when assessing its ability to repay debt, austerity programs haven’t even worked as a way to reduce borrowing costs.
Meanwhile, David Cameron -- who recently visited Ottawa and praised Stephen Harper for his economic wisdom -- admitted yesterday that Britain, for the second time, is in a recession.
The Flaherty budget was never about jobs and growth. It was about getting rid of government agencies which the Harperites cannot abide.