Bill Morneau is Canada’s finance minister. He was in St. John’s this past week and spoke to the Board of Trade, the capital city’s business group.
And true to form that wonderful word ‘infrastructure ‘was thrown around with reckless abandon. Although the Minister was quick to point out this was no silver bullet , it was all he had on offer and thought it could really help. And short term in some specific places , perhaps . But it is money the Feds don’t have in fact. It is really all borrowed money. He goes around talking of spending , spending his grandchildrens’ money. How easy! And wrong.
Of course, the Minister , if he was being really truthful given that the Feds have a loan guarantee, he would be referencing the billions of dollars Muskrat Falls project and expressing his dismay over the cost overruns and mismanagement now evident. He would be chastising the provincial government for its unwise budget , cutting public libraries while all sorts of other unnecessary spending should be eliminated first. And a host of other imprudent spending decisions. Oh, no, as we all know this is politics not finance and economics notwithstanding the precarious predicament of the Province’s finances and economy. So , like too many finance minister before him he discards his solomn responsibilities ,even with an election years away , and talks more public spending rather than sensible finance decision making , and encouraging the Province to provide better governance and over sight on its disastrous hydro project.
No Mr. Minister, Infrasructure won’t cut it . Everywhere it has been tried it is not been successful in and of itself in lifting a jurisdiction to success. Few remember the late fifties and the Diefenbaker winter works program ; lots of post offices, few long term jobs. Look at Japan. It has been trying to spend its way without success, just more debt. Uncle Sam had its $800 billion stimulus and still can’t get over 2% growth . If spending was the answer France would be a powerhouse rather than an anemic partner of the EU . And on it goes .
Mr. Minister , nothing beats living within your means; obviously an alien concept to you. Keynes is very much alive in your world, sadly.
Productivity , innovation , a fair tax system for investment and business growth , and rigorous education standards are what matters in the long run . With such emphasis firmly in place limited targeted ‘infrastructure ‘ has a place , not the priority core element but a complimentary part.
Canada has no chance of breaking out of its perpetual mediocrity without such an approach.