With the price of oil hovering around $30 a barrel and dragging the loonie down with it, Finance Minister Bill Morneau is facing increasing pressure to act.
Conservative Finance Critic Lisa Raitt has urged immediate action, rather than waiting for the release of the budget, for which Morneau has not yet publicly set a date.
“The finance minister should be treating it more as a crisis,” Raitt told CTV’s Power Play.
Raitt said the Liberals ought to be “taking a look at whether or not all those spending promises that were made during the campaign are something that should happen now or be parked for a future time.”
“There’s not a lot of tax revenues that are going to be coming in and digging a huge hole right at the beginning of a mandate that is going to make it very difficult to react should something worse happen,” Raitt added.
Raitt said the Liberals have an opportunity for growth that her government did not enjoy when it faced the economic recession in 2009: a growing U.S. economy.
“As an exporting nation with them as our largest partner, I’d be doubling down to ensure that we’re doing the best we can to get our products into that American market,” Raitt said, adding she would focus on agriculture, forestry and “cutting red tape.”
Earlier in the day, Morneau told reporters in Montreal that he continues to view the Liberal campaign platform as the best way to grow the economy.
“We think by lowering taxes for the middle class, by adding the Canada Child Benefit, by investing significantly in infrastructure, that’s the right thing to do,” he said.
Morneau added that the middle class tax cuts that took effect Jan. 1 are already “putting more money in the pockets” of nine million Canadians, who can spend it, stimulating the economy.
The minister would not say whether the Liberals will go deeper into deficit than the $10-billion promised during the election campaign, adding “I have not yet written the budget.”
NDP Finance Critic Guy Caron, meanwhile, told CTV Power Play that he agrees with the Liberals’ plan to invest in infrastructure and tax cuts to stimulate the economy.
However, Caron said the tax cuts should have gone to lower-income Canadians because the upper middle class might not spend the money.
Both the NDP and Conservatives vowed during last year’s election campaign to balance the budget, while the Liberals said “modest deficits” would allow them to invest in projects that grow the economy.
But as Morneau pointed out in a speech Monday, the price of oil has fallen by half since the election campaign, meaning the government is now projecting a $15 billion per year drop in GDP starting this year, compared to what was projected in the last budget.
Carleton University Professor Ian Lee told CTV News Channel that the oversupplied global energy could force the price of oil even lower, to $20 a barrel, if lower-cost producers like Saudi Arabia keep pumping.
"It's a game of global chicken," he said. "We're really waiting to see who is going to blink first."
