With Parliament having returned for a new session, senior government ministers are focusing on job creation as a top priority while the Liberal government is preparing to quickly allocate infrastructure funds in order to help kick-start the economy.
Nearly three months after they formed government, the Liberals face a key political challenge: how to respond to the economic damage left by declining oil prices and a weak dollar.
Government House Leader Dominic LeBlanc said, “The government is conscious of the need to stimulate the economy. Cabinet is still grappling with a number of the decisions that we will take in the coming weeks and months”
Prime Minister Justin Trudeau, who arrived in Canada after several days at the World Economic Forum in Switzerland, is expected to be questioned by opposition parties for the government’s response to the headwinds of Canada’s declining economy.
LeBlanc said Finance Minister Bill Morneau is preparing some government decisions that will be included in the Liberals’ first budget. He added that the Liberals recognize that the economic circumstances are very difficult and being prudent with taxpayers’ money is of immense importance.
The Liberal platform promised an extra $60 billion for infrastructure over the next decade, but only $17.4 billion in the next four years.
With oil and the Canadian dollar slumping, there have been mounting calls for increasing fiscal stimulus which would almost certainly lead to larger deficits of more than $10 billion per year.
At a cabinet retreat in New Brunswick last week, Trudeau said that while his government is looking for ways to create jobs but added that it would be strategic in how it invests on infrastructure with the emphasis on projects that will have a lasting impact in terms of productivity and economic growth.
The Liberals have targeted three areas: public transit, social infrastructure such as affordable housing and waste-water systems, and green projects.
According to Infrastructure Minister Amarjeet Sohi, the government is working to identify future infrastructure projects, including those that can benefit from unused funds set aside by the previous Conservative government. He promised the investments will be “very principled” and “very thought out.”
Mr Sohi added, “Building of infrastructure creates jobs. It also enables long-term growth and improves our productivity.”
Mr Sohi said he will rely on local councils for advice on how federal infrastructure funds should be spent in their communities because they have the expertise and the government will not work using a “cookie-cutter, top heavy approach.”
Apart from the economy, the government is facing other issues that were raised recently:
The Liberals initially pledged to bring in 25,000 by the end of December. They pushed that back to the end of February and promised to bring in 10,000 by the end of the year. After missing the 2015 deadline by 12 days, Immigration Minister John McCallum said Canada will meet its end-of-February deadline. Finding ways to properly house the refugees remains an ongoing challenge.
Getting Alberta oil products to export markets has become more difficult. B.C. Premier Christy Clark has criticized a proposed western pipeline through her province, and Montreal mayors have come out against the Energy East pipeline destined for New Brunswick.
Federal Natural Resources Minister Jim Carr said his mandate is to “modernize” the National Energy Board, while maintaining transparency.
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