OTTAWA - The Canadian economy is still falling and will result in many more job losses, but the Conservative government is likely done for now on new stimulus spending to revive growth, suggest Prime Minister Stephen Harper and his finance minister, Jim Flaherty.
In separate public utterances a day after the meeting of G20 countries, the two top Canadian leaders on the economy gave every indication that the $40 billion stimulus budget may be as far as they are prepared to go, even if, as Harper suggests, it costs him his job.
`I'm kept up at night by the state of the global economy and, frankly, by the extent to which I can't do anything about it," Harper said in an interview with Business News Network aired Friday.
`I mean there's many things we could do," he told the Toronto-based business TV channel. The stimulus helps mitigate against some of the effects here in Canada. But we fundamentally can't change it. We didn't cause the global recession, we fundamentally can't resolve it. That frustrates me."
At another point, Harper predicts "more big job losses" for Canada and "that I may eventually lose mine."
Flaherty sounded a similar tune in a speech to the Canada-U.K. Chamber of Commerce in London, in which he characterized the Canadian economy as being "closer to the bottom," but not there yet.
In the past, Flaherty has said he is prepared to do more if needed.
During the London speech, he appeared to dismiss those calling for more stimulus, saying the key is to ensure the money already committed is spent quickly.
`There is no point in spending 10, 20 billion dollars in 2010. We need to spend it now," he said, adding he has the authority to spend 90 per cent of 2009 stimulus money in the next six months, and that most of that will be spent in the next 90 days.
The prime minister's statement was called defeatist by Liberal finance critic John McCallum, who said it is becoming clearer by the day that the government should up the ante on stimulus, as the Organization for Economic Co-operation and Development recommended this week.
The U.S. economy remains in freefall -- with 663,000 more jobs vanishing in March -- and a consensus of economists say next week's employment data will likely reveal another 57,500 jobs were lost in March in Canada. That would bring the job losses in Canada to 350,000 since October.
McCallum also criticized the progress on spending the budget stimulus money, noting that Ottawa has yet to sign an infrastructure project agreement with any province.
`Jobs are dropping very very fast in this country and it's looking like the Canadian economy needs more," he said.
`By their behaviour they show a distinct lack of the urgency that the situation merits. We're in a mess and so the responsible thing to do is to act with urgency."
Flaherty raised some eyebrows with his comment that in comparison to what Canada's early settlers bore in coming to the country with nothing, "Relatively speaking this is a mild economic recession. We are able to withstand this," he said.
In turn, Harper was particularly dark about what could happen if the recession does not abate.
`There is a real risk, as this recession continues and if it deepens, that we will have an explosion of global security concerns, threats across the world," he said.
Harper did not elaborate about the nature of the unrest he fears, nor did he expand on whether he believes the recession is placing his government's survival at risk.
Late last year, the Liberal and NDP opposition parties in Parliament, backed by the Bloc Quebecois, formed a coalition and planned to defeat Harper's government in a non-confidence vote over what they said was the government's inaction to stimulate the economy and combat the recession.
That plan was derailed by the government's move to ask the Governor General to adjourn parliament for six weeks until the Conservatives could table their 2009-2010 budget in late January.
The fall-out, however, resulted in the elevation of a more popular Michael Ignatieff to the leadership of the Liberal Party, which has risen into a statistical tie with Harper's Tories in public opinion polls.
There is near universal consensus among economists and even policy makers that the global economy -- and Canada -- are probably shrinking at the fastest pace since the Second World War.
The critical question is what happens after the contraction stops, perhaps late this year or early next year, according to most calculations.
Will the economy bounce back strong or even moderately, or will it continue to scrape along the ocean floor for years?
There have been some encouraging signs, including a month-long rally in stock markets, but Friday's U.S. jobs numbers show just how low the American economy has sunk.
U.S. economist Peter Morici said Friday that conditions are deteriorating so much it may be time to talk about depression rather than recession in the United States.
He said massive government stimulus may temporarily stall the decline, but structure weakness likely means the troubles will return when the government money runs out.
`A depression is not self-correcting," the University of Maryland economist explained. "The economy shifts down to permanently lower levels of production and sales, high unemployment rates become chronic, and federal deficits become narcotic -- federal deficits dull the senses but don't cure the disease."
Scotia Capital economist Derek Holt won't go as far as Morici, but he also calls unrealistic the federal government's contention that Canada will bounce back relatively strongly.
As an open, trading nation, he said, Canada can't protect itself from the weakness of the U.S. and global economies.
`It's a bit of a fantasyland view that this will be a straightline recovery," said Holt. "There's no way you shake off excesses that were built over the better part of a decade in a few quarters. That's going to take a multiyear period of adjustment to burn off."
Asked if his view was overly rosy, Harper did give a hint that his relative optimism about recovery may involve some boosterism.
`I think, you know, the leader of a country cannot be a cheerleader for pessimism," he said.
