Corporate Canada is still sitting on its profits. Despite cheer leading from Mark Carney and Jim Flaherty, business is not investing that money and it is not creating jobs. Carol Goar writes:
According to Deloitte Canada’s 2013 outlook, “defensive balance sheet strategies are the order of the day.” Its survey of chief financial officers showed their companies’ top priorities were cutting costs and bolstering cash flow. Capital spending ranked a distant fourth. “By and large, big companies have the power to invest,” the consultancy said. “The missing ingredient — and one which holds the key to corporate behaviour — is confidence about future growth.”
The missing ingredient is demand. And when consumers are tapped out and carry heavy debt, the government is the customer of last resort. When he faced defeat in 2008, Stephen Harper was willing to act as that customer. Now, having encouraged Europe's Age of Austerity, he has applied the same medicine to Canada. As last week's job report indicates, that idea didn't work out so well:
Canada's economy lost 54,500 jobs in March, bleak new data from Statistics Canada showed Friday.
That's the worst month for Canadian employment since before the last recession, in February 2009. When added to the numbers for January and February, they show that Canada's economy has lost 26,000 jobs so far in 2013 as a whole.
The job losses pushed Canada's jobless rate higher to 7.2 per cent.
The data raises questions about the government's chief sales pitch -- superb economic management:
It raises questions about the value of the $1.4 billion in investment tax credits he offered the corporate sector to do more research, open new markets and modernize their factories and equipment. They all require capital spending, which doesn’t appear to be on the corporate sector’s agenda.
And it leaves taxpayers wondering what the nation is getting for the $60 billion in corporate tax cuts the Conservatives have doled out since they took office. The recipients of this largesse aren’t using it to spur economic growth. They aren’t creating jobs. And they aren’t turning scientific discoveries into commercially viable products.
The Harper mantra is corporate tax cuts create jobs. That notion has always been hogwash. Customers create jobs. Believing what Stephen Harper says is the equivalent of believing that the earth is flat.