Finance Minister Joe Oliver expects Canadian companies to start freeing up hundreds of billions of dollars’ worth of cash reserves on the pumped-up U.S. economy.
Speaking to CTV’s Question Period, Oliver said the United States’ “sustainable” economic growth means Canadian corporations that have been hoarding hundreds of billions in profits now have a reason to spend.
“I think that (U.S. economic growth) will start to liberate the cash that a lot of businesses are sitting on because they need to know that exports will have a home. And it’s starting to look like they will south of the border.”
According to Statistics Canada data, businesses were sitting on $626 billion in unused cash in the last quarter of 2013 -- a jump of six per cent in the previous quarter. And the International Monetary Fund has also warned about how Canadian companies are accumulating said "dead money" faster than any other G7 nation.
Those companies have faced criticism for sitting on massive reserves while refusing to raise wages or invest in training.
For Oliver, economic growth in the U.S. will give Canadian companies a reason to spend their reserves. On Friday, the U.S. government announced that the economy had added 321,000 jobs in November -- the best figure in almost three years. The U.S. government also reported that the unemployment remained at 5.8 per cent.
Oliver noted that it’s a good time for Canada to be neighbours with the U.S., especially as the global economy continues to suffer. He noted low inflation, Europe’s “flat” economy and a cooling China.
The minister also spoke to plummeting crude prices, which have tanked since July, falling from $100 a barrel to below $70. Oliver could not say exactly what the drop in oil prices means for job numbers, but assured Canadians that the government is monitoring the situation.
“I can’t give you an employment number. We’re looking at it, we’re monitoring it and, of course, because of the volatility, we don’t know where precisely it’ll settle.”
With questions of how the government is going to deal with loss of revenue from falling oil prices, Oliver said he does not see a need for the government to roll back infrastructure spending as a result, adding that he is “confident” the Conservatives will still balance the federal budget next year.
Oliver also chimed in on another topic south of the border. After meeting with New Jersey Gov. Chris Christie Friday, Oliver said he thinks it’s likely the Republican star will run for president in 2016, adding that would be good news for Canada.
“He’ll announce, but I think there’s a good chance (Christie will run). He’s a very personable guy and, in terms of Canada, he really wants to enhance the bilateral trade relationship. He’s a great proponent of the Keystone XL pipeline and I think he’s going to be a friend going forward,” said Oliver.
With files from The Canadian Press
