OTTAWA -- Despite concerns over the impact of plunging oil prices on the Canadian economy, Finance Minister Joe Oliver says the federal government will not bring forward a stimulus plan at this time.
Oliver said the federal government still intends to balance the budget in 2015.
“We’re not going to engage in a stimulus program at this point,” Oliver told CTV’s Question Period. “We’re comfortable that the Canadian economy is in good space, in spite of this shock.”
That shock – a plunge in oil prices to $50 a barrel, from more than $100 a barrel in June -- is causing concern about possible negative impacts on the Canadian economy.
Oliver recently announced that the government would delay the federal budget until at least April to determine what the implications of falling oil prices would be. And in a surprise press conference last week, Bank of Canada Governor Stephen Poloz announced an interest rate cut to 0.75 per cent, from 1 per cent, as “insurance” against the potential effects of collapsing oil prices.
Alberta felt the initial brunt of the drop in oil prices with recent job cuts. For instance, Suncor, which has a strong presence in the oilsands, laid off 1,000 workers earlier this month and slashed $1 billion from its capital budget.
While Oliver acknowledged the slump, he insisted that the Canadian economy is strong enough to handle the change in oil prices.
“While one sector has been clearly hurt and some regions of the country are going to suffer, this is a big country with a diversified economy and … the impact of lower oil prices will have a lot of positive and negative effects,” said Oliver.
When asked about plans for the upcoming budget, specifically money for manufacturing, Oliver refused to discuss details. He did, however, shut down Ontario Premier Kathleen Wynne’s call for more infrastructure spending.
“The province of Ontario has suggested that we go into deficit to the tune of $34 billion every single year. I mean, we’re not going to incur that kind of debt over the next four years,” said Oliver.
Wynne told Question Period’s Robert Fife the $75 billion that the federal government has set aside for provincial infrastructure over the next decade is not enough.
“When you think about it, the federal government has committed $75 or so billion dollars over the next 10 years, and Ontario alone has committed $130 billion for infrastructure over the next 10 years. You can see the difference in magnitude,” said Wynne.
“What we need is to bump it up. We need to be building, because if we’re building, then we’re growing.”
Wynne said she plans to raise the issue of infrastructure spending at a premiers’ meeting in Ottawa next week, as well as the idea of an economic union and internal trade between provinces.
