Morneau: Infrastructure spending on target
TORONTO — Federal Finance Minister Bill Morneau said Friday he’s comfortable with the amount of infrastructure money the Liberal government has managed to get into the economy, despite a report from the Parliamentary Budget Officer that questions the speed of the federal government’s spending program.
“We have a significant number of projects already underway. The numbers are actually, from our perspective, in the range that we expected,” Morneau told reporters after emerging from a meeting with private sector economists in Toronto.
The PBO report, released Tuesday, shows that government infrastructure money isn’t being spent as fast as originally promised. The report concludes that infrastructure spending that was intended to foster growth during the 2016-17 fiscal year ending this March may not generate economic activity until subsequent years.
In last year’s budget, the federal government estimated that infrastructure spending and other measures would add 0.5 percentage points to Canada’s gross domestic product, and a full percentage point in the following year.
“We do expect to see a positive economic impact from those infrastructure investments in 2017,” Morneau said.
The finance minister was in Toronto as part of a round of prebudget consultations. He met with 12 economists — nine from banks, two from business groups and one academic — to collect their views and hear their forecasts for the Canadian and global economies.
Emerging from the closed-door session, the minister was asked what the economists had to say about the federal government’s infrastructure spending plans.
“When you get a group of economists in a room you always have more than one point of view,” Morneau said. “But I would tell you that, broadly, I was pleased with the sense that I heard, which is that making investments is the right thing to do for the long-term health of the economy, and that we have the fiscal capacity to do so.”
Morneau was also asked about changes the government last year made to the rules on residential mortgages. The new lending rules are supposed to prevent Canadian homebuyers from financing their home purchases with loans they can’t really afford.
Morneau said the government is watching mortgage and housing markets to see whether the new policies are protecting consumers. “We continue to monitor the housing market and to make sure the risks are appropriate to the market. We don’t have any measures under consideration at this stage.”
A recent spike in bond yields has led some banks to raise their residential mortgage rates. Morneau was asked whether the government was concerned about the impact this could have on consumer debt.
“We are obviously not in control of banks’ individual decisions around mortgage rates. We expect them to put rates at the place that makes the most sense based on the economic situation that they find themselves in,” he said. “Our goal will be to work to ensure that Canadians make the investments that make most sense for their families and protect them from risk.”
Bystanders watch as Federal Finance Minister Bill Morneau briefs journalists following a meeting with leading private sector economists in Toronto, on Friday.