“The government believes that paying down debt is not appropriate in the current economic circumstances.” So says one of the brochures accompanying today’s federal budget.

Instead Ottawa will use any money left over on Mar. 31, 2002, when fiscal 2001-02 ends, to fund a new Strategic Infrastructure Foundation and/or to promote sustainable development in Africa — although neither measures will provide short-term stimulus to the economy.

Finance Minister Paul Martin feels that there is enough economic stimulus in place through lower interest rates, defence and security spending necessitated by the September11 terrorist attacks, and the tax cuts and increased government spending announced in previous budgets and economic updates. In addition, the automatic stabilizers — government spending that automatically rises when the economy weakens, such as employment insurance payouts — will put money into the economy.

In the past year, interest rates have come down 350 basis points. Lower taxes are putting $17 billion this year and $20 billion next year back into the pockets of Canadian families and businesses.

Instead, the government is spending on other strategic investments. These investments, which cover all additional government spending, are contributing $9 billion this year and $11 billion next year. This includes the extra spending on security and defence, various strategic infrastructure programs, the increased federal contributions to health and a raft of other initiatives including $569 million in upgrades for federal departments and agencies.

Employment insurance benefits are expected to rise to $1.5 billion in 2002-03 from $1.3 billion this year and $1.1 billion in 2000-01.

The only measure specifically aimed at helping those affected by the current economic weakness is the $2 billion in deferral of tax installments in Jan.-Mar. 2002 for small businesses. This will help with cash flow in the coming months, hopefully allowing most small firms to survive and continue to employ their workers. It will not, though, help for long since the firms will be required to pay their deferred installments when the six months are over.

Martin’s stance will likely get a good grade from the many economists who didn’t want to see much action in the budget, believing that monetary policy should bear most of the burden of short-term economic stimulus. They feel that fiscal policy usually takes too long to kick in to be of much short-term help and that it’s also difficult to decrease government spending once the need for stimulus is passed.