The size and duration of the anticipated deficit outlined in the 2009 federal budget, as announced Tuesday, raises more questions than it solves, according to FEI Canada, the professional membership association of senior financial executives.

“When will Canada repay this new debt?” asks Michael Conway, chief executive and national president, FEI Canada. “While significant stimuli may sound like the solution to the economic crisis, overspending will not solve our core problems and indeed may take away from long term policy initiatives.”

With economists, and even the Bank of Canada, projecting that we will see economic recovery toward the end of 2009, Conway notes, “It appears that we are implementing a four-year solution to a one-year problem and, in the process, mortgaging future generations.”

FEI Canada says it has long been a supporter of the introduction of well thought out infrastructure spending initiatives that would have the dual positive impact of near-term employment benefits while creating better long-term positioning for a stronger and more productive economy as Canada emerges from recession. The association is calling upon the federal government to ensure that appropriate accountability and transparency of spending is maintained in this new spending environment.

“We are seeing big money numbers devoted to infrastructure which is welcome news, yet we can’t be sure that the support will flow in a way that will deliver the immediate relief intended,” says Conway. “We recommend the government implement strong controls, processes and reporting mechanisms in order to monitor the distribution of funds in a well controlled manner, ensuring that good financial management governance is maintained.”

The budget does provide several positive initiatives that will support workers and will help stimulate the flow of credit to support Canadian companies in their pursuit of innovation and competitiveness, the associations says.

It commends the government for having earmarked funds for the retraining of the growing number of displaced workers. In view of exponentially increasing job losses of the past few months, this financial assistance will help displaced workers more quickly reposition themselves for re-employment.

A long-time proponent of measures that support Canadian innovation and competitiveness, FEI Canada is pleased to see the lowering of income tax rates to small businesses, the extension of the 50% CCA rate for manufacturing and processing machinery, the removal of tariffs on imported capital equipment, harmonization of sales taxes and in particular, supporting improved access to financing for businesses, particularly small businesses, included in this budget.

IE