MONTREAL (Reuters) - Canada’s Conservative government will do whatever it takes to help Canadians through the worst global recession since the 1930s, Finance Minister Jim Flaherty said on Thursday.
In a speech at McGill University in Montreal, Flaherty pledged to move as quickly as possible to roll out a stimulus package as of the start of the fiscal year on April 1.
“We must do what it takes now to protect Canadians during the current global storm,” he said.
“The global situation is unprecedented, changing rapidly, at times its deeply unsettling.”
Flaherty announced a C$40 billion ($32.5 billion) two-year stimulus plan in his budget in January. Parliament has since approved up to C$20 billion of that for 2009-10.
“These funds need to be spent now,” Flaherty said.
As the economic outlook steadily worsens, opposition parties have begun hinting there may be a need for additional stimulus, and at the very least, further changes to unemployment benefits for displaced workers.
Flaherty has said recovery will only come to Canada once the global banking system is repaired, a theme Canada is likely to emphasize at the summit of G20 powers in London next week.
The G20 agenda would aim to stabilize the financial system, he said. “That is, to fix the banks. Not the Canadian banks which are fine, thank you, but to fix the banks certainly in the United States, some of the European banks, restore the flow of credit.”
Earlier on Thursday, Flaherty said the G20 leaders would not spend much time discussing the role of the dollar as the global reserve currency. China proposed earlier this week a sweeping overhaul of the global monetary system, outlining how the IMF’s Special Drawing Rights currency basket could replace the dollar as a super-sovereign reserve currency.
Flaherty has resisted pressure to mark down his forecasts to reflect the sharper-than-expected downturn in Canada. But he was unusually candid in his speech as he outlined the evolution of his thinking since the credit crunch first erupted in 2007 to the full-blown recession the world is now in.
It was particularly difficult for him, he conceded, to embrace the need to plunge the country into fiscal deficit again after 11 straight years of surplus.
“But this is a dramatic turnaround for me as a finance minister that has done three balanced budgets ... to get to accept the realization that what Canada needs is this kind of economic activity spurred by government,” he said.
“Is that a proper role for government? Some libertarians, some conservatives would argue that it is not a proper role of government. I think we have to be pragmatic,” he said.
Writing by Louise Egan; Editing by Jeffrey Hodgson