As finance minister Jim Flaherty prepares a crisis budget offering billions of dollars of investment to stimulate Canada’s flagging economy, some prominent prairie economists have some ideas about how agriculture could benefit.
A report from the Calgary-based Canada West Foundation recommended that any stimulus package in the Jan. 27 federal budget should concentrate on measures that can quickly create jobs, maintain consumer confidence and make Canadian businesses more competitive.
“To the extent possible, the stimulus package should be aligned with long-term policy objectives to enhance Canada’s competitiveness, productivity and trade,” said the report. “In this sense, the current crisis is an opportunity to get things right for the long haul.”
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Two of the University of Saskatchewan economists consulted by the Canada West Foundation say infrastructure investments that would help agriculture would make sense.
Peter Phillips, a public policy professor who has taught agricultural economics, said investment should be concentrated on projects that can happen quickly and will help the economy in the long term.
He said investment in the western rail corridor or upgrading ports to reduce congestion and improve the export flow could fit into that category.
Improvement of the prairie road system also could meet the test.
“I really think these are areas governments should be looking at,” he said. “These would be investments that would make the agricultural economy more competitive in the long term and that’s what we want.”
Phillips said investment in a product-identification and traceability system for livestock producers also would be a sensible idea.
“That clearly would be a benefit for the future of a sector that is now having some problems and it would be more strategic than a short-term safety net boost, for example.”
In his submission to the Canada West Foundation survey, he acknowledged that agricultural commodity prices have fallen and that is a problem for the sector. But it is a normal cycle and business operators can plan for it.
“Short-term loans and other support for investments in improving productivity might help a bit, but it would be unwise to rewrite the rules of these sectors by offering massive targeted subsidies, as that would jeopardize our trade in world markets,” he wrote.
“The only long-term solutions for firms in these sectors is to be as efficient and competitive as possible, building up reserves in good times to tide them over in downturns.”
Bill Kerr, a professor in the University of Saskatchewan bioresource, business and economics department, agreed that infrastructure investment that improves competitiveness for a sector like agriculture would be the best course.
He said improvements in the transportation infrastructure or ports would be useful if they could be done quickly.
In his submission to the Canada West Foundation, Kerr said the best short-term stimulus would be in programs that help retain consumer confidence including increased public pension benefits, enhanced employment insurance, increased grants to students and grants to fund house renovations that improve the environmental credentials of the building.
But he said if sectoral lobby groups win the day and convince the government to prop up industries such as forestry and auto, then the hard-hit Canadian livestock sector also would have a good claim for help.
“If you are going to go the sector-support route, then cattle producers and other agricultural sectors should be in the envelope,” he said.
It would not be his preference to pour money into stopgap sectoral support.
“I think we have to be more strategic.”
