The recent economic downturn in Europe and the United States will inevitably impact Canada – but Jim Flaherty says Ottawa's 2011 budget numbers are still on track.
As expected, the Finance Minister's message to a Commons committee Friday acknowledged recent turmoil in global markets but stressed that Canada intends to stay the course with its deficit fighting plans.
He conceded that, like other Group of Seven countries, the economy had a disappointing second quarter. "Canada cannot and is not resting on its laurels. We are cognizant and prepared for the challenges ahead," he said.
"We are closely and constantly monitoring global developments, and I remain in frequent and regular contact with my global counterparts. While we should not understate the risks, Canadians can be confident that our country is well positioned to face global economic challenges as we have done successfully in the recent past."
Mr. Flaherty said current troubles abroad are largely due to concern over government debt and deficits, but he said Canada can be an example for others to follow in terms of returning to balanced budgets.
The minister flatly rejected a suggestion from NDP finance critic Peggy Nash that Ottawa intervene with a "counter cyclical" approach to the economy with programs to boost spending on infrastructure, broadband and Aboriginal communities.
"The member is advocating more spending. That is actually the problem in Europe," Mr. Flaherty said. "That's exactly what we should not do."
When pressed by Liberal MP Scott Brison as to what he would do if the economy worsens, the Finance Minister signaled he would be prepared to change course. "If we were to see a dramatic deterioration ... then of course we would act to protect Canadians, as we have done before," he said.
"We will stay the course. We will balance the budget by 2014-15," he added. "That's the plan and we intend to stick to the plan."
Mr. Flaherty listed off a string of positive statistics to argue his case that the Canadian economy is in better shape than most.
"Our economic and fiscal fundamentals are sound and sustainable. We have experienced seven consecutive quarters of economic growth," he said. "Almost 600,000 more Canadians are working today than when the recession ended in July 2009. Both the IMF and OECD forecast that our economy will be among the strongest in the G-7 this year and next."
"Recently, Moody's renewed Canada's triple-AAA credit rating based on Canada's – and I quote 'economic resiliency, very high government financial strength, and a low susceptibility to event risk.'"
The Finance Minister is scheduled to appear for one hour. He will then be followed by Bank of Canada Governor Mark Carney.
Opposition MPs requested the special summer committee meeting in order to get an update as to how the flood of bad global economic news is impacting the Canadian economy and Ottawa's finances.