OTTAWA (Reuters) - Canada said on Wednesday it is unlikely to introduce any new economic stimulus measures until next year’s budget and said it will slide into a deficit if necessary and curb public sector wage growth.
Finance Minister Jim Flaherty said he would not put stimulus measures in the autumn economic and fiscal update that he will unveil next week.
“We’ll look at that as we go up to budget time, not in the fall economic update,” he told reporters when asked if he would follow through on Canada’s commitment at the G20 summit last weekend to enact fiscal stimulus measures to jolt some life back into a slumping global economy.
Ottawa normally publishes its budget plan in late February or March.
Flaherty said the report next week will not look like a “mini-budget” and will not contain details on government aid to the auto sector.
Tax cuts already announced by the Conservative government plus steps taken by provincial governments represent a stimulus of almost 2 percent of gross domestic product next year, he said.
“And that is before we do anything in addition. If we have to do more, we will do more. If it means we have to run a deficit, we’ll run a deficit.”
Canada is the only member of the Group of Seven industrialized economies to have posted a sustained budget surplus since the 1990s. But Flaherty said he would break with that trend to shore up the economy, which Canada’s top banker on Wednesday could slide into a recession next year.
Flaherty said he would seek to limit spending growth in “certain areas” of government, including wages. “It may be necessary to do that,” he said, referring to wage hike limits.
Taking a bolder stance than before, Flaherty also said he was willing to exclude the province of Quebec from his plan to create a single securities regulator for all of Canada, replacing the patchwork system of 13 provincial and territorial bodies.
Flaherty has been pushing for the national regulator so investors can file prospectuses with one entity rather than several, but has failed to bring Quebec and some other provinces on board.
“The flaw we have in our system is the fact that we still have 13 securities regulators. So we are going to go ahead and create a Canadian securities regulator,” he said.
“We’re going to do this with our willing partners and those willing partners include, of course, some of the provinces.”
“We would welcome (Quebec) to join us and work with us but those that do not choose to, will not join,” he said.
The approach was applauded by the Canadian Bankers Association, which said it would reduce the cost of raising capital and give Canada a single voice when global regulators meet to discuss the market turmoil.
“There have always been good reasons to create a common securities regulator, but the recent international financial market turbulence has made these reforms more crucial than ever,” said Nancy Hughes Anthony, chief executive of the bankers’ group.
An experts panel given the task of drafting legislation on the matter will report back to Flaherty in late January, he said.
Reporting by Louise Egan; Editing by Peter Galloway