Prime Minister Stephen Harper continued to defend his government's fiscal record Tuesday, hours ahead of a rare meeting with the finance minister and Bank of Canada governor on the country's economic direction.
Harper is to meet with Jim Flaherty and Mark Carney at 4 p.m. Earlier Tuesday, Liberal Leader Bob Rae stood up in the House of Commons to criticize the Tory government's approach to weathering the financial crisis.
Rae quoted from a report written by BMO Financial Group chief economist Sherry Cooper that sounds the warning bell over the government's current belt-tightening initiatives, with the objective of finding billions of dollars in savings in an effort to balance the budget.
Cooper "said recently in her newsletter that we are in danger of repeating the deflationary policies that caused the 1929 stock market crash and the Great Depression," Rae said during question period.
"She goes on to say that the misplaced belief that the road to economic prosperity is paved by near-term fiscal tightening as espoused by our prime minister, shows we have learned nothing from Herbert Hoover's response to the Great Depression. I wonder if the prime minister would care to comment on these words from a distinguished economist?"
Harper shot back that his government's Economic Action Plan and overall approach to the economy have been hailed by experts around the world.
"It is not of course as the leader of the Liberal party would suggest," Harper said. "In fact, we are running a very expansionary fiscal policy right now, but we are obviously undertaking good management, some modest savings to ensure that as the economy recovers that we will in fact balance our budget and retain our fiscal advantage."
The economic talks come on the same that day Canada's Parliamentary Budget Officer released his latest report on government spending.
The report says that in the first quarter, the government kept spending in line with what it forecast in its budget.
"Given the government's focus on constraining operating spending to achieve fiscal targets, the PBO will continue to monitor the impact of the operating budget freeze," the report said.
The budget watchdog looked at spending in a number of federal departments and agencies. The report found that operating spending was up more than four per cent from 2010, to nearly $12 billion. The increase was largely attributable to the costs associated with the federal election, as well as the census.
However, capital spending and transfer payments, excluding old age security and the Canada Health Transfer, were down from 2010.
Flaherty's 2011 budget forecast an increase in program spending of about 3.2 per cent from 2010. The finance minister has said he intends to find $4 billion in annual savings in an effort to balance the budget by 2014-15.
