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Globeandmail.com

Reaction: Stimulus package draws mixed reviews
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RICHARD BLOOM
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Globe and Mail Update
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Monday, December 10 – Online Edition, Posted at 5:26 PM EST


Paul Martin's latest budget generated mixed opinions from special interest groups and economists as they reacted to a package that outlined massive security spending as well as money earmarked to help kickstart the faltering economy.

The budget committed $7.7-billion in security spending over five years, including $2.2-billion for air security; $1.6-billion for intelligence and policing; $1.2-billion to improve border security and efficiency; $1.2-billion for the Defence Department; and $1-billion for screening entrants to Canada.

Alain Pellerin, executive director of the Conference of Defence Associations, told globeandmail.com the money "is welcome" but doesn't address fundamental shortfalls.

"It doesn't even go half-way," Mr. Pellerin said.

A report released by the association in September said the cash-starved Canadian Forces cannot meet basic commitments to help protect the United States, even as Defence Minister Art Eggleton offers military assistance to Washington's antiterrorist campaign.

The Conference of Defence Associations is an umbrella group with a reported membership of 600,000 Canadians who have connections to the military. The report was prepared by former military officers.

Walter Robinson, head of the Canadian Taxpayers Federation, said taxpayers suffered in Monday's budget.

"When the going gets tough, the government goes shopping. And they've gone shopping to the tune of about $7-billion today," he said.

While he acknowledged the need for more spending on security, he said the government should have found the money by eliminating "corporate welfare" and waste, instead of continuing to use money from the Employment Insurance plan's surplus.

In the health care sector, Sharon Sholzberg-Gray, president of the Canadian Healthcare Association, said the government needs to do more.

"There is still unfinished business regarding health," she told globeandmail.com.

"We see the government boost spending for security, but health care is still the No. 1 concern for Canadians," she explained.

The Canadian Labour Congress said the federal budget forgot working Canadians.

"There is very little for the working people," Jean Wolff, director of communications for the Canadian Labour Congress, told globeandmail.com.

"The government has left the working people out in the cold," he said.

Some economists, meanwhile, were smiling.

Craig Wright, chief economist at Royal Bank of Canada, said that a two-way trade flow between Canada and the United States is critical to both economies and he is glad to see money heading toward that measure.

"It's good to see some initiatives to free up movement of goods and services. It's a step in the right direction," he said.

The border issue is about economic survival, Mr. Wright said, adding that corporate decisions to locate in Canada often come with the assumption that the U.S. market will be easily served.

Marc Lévesque, senior economist with Toronto-Dominion Bank, said he doesn't think anyone is going to have an issue with a big bulk of spending being applied to enhance security measures.

"I think essentially there are two concerns: one of them is that the government has not set aside its traditional $3-billion contingency reserve, not only for the current fiscal year but for the fiscal years going ahead.

"There is no more factor for economic prudence, either. [The government is] planning for a zero deficit, but there is a little bit of an economic twisting here. They have basically done away with part of the cushion they usually have," he said.

"It is an achievement that even in a recession we've got a balanced budget," said Sherry Cooper, chief economist at BMO Nesbitt Burns.

"It means that even in a recession they made the decision to be very prudent and conservative in their stimulus, and that is evident in this budget. In a recession, to have a balanced budget as opposed to a deficit, that's very conservative," she said.

With reports from Canadian Press, Reuters News Agency, Jeff Gray, Roma Luciw and Allison Lawlor


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