Economic Action Plan

Economic Action Plan
Name	Economic Action Plan
Type	Fiscal policy program
Launched	2009
Jurisdiction	Canada
Key people	Stephen Harper, Jim Flaherty
Budget	CAD 40 billion
Status	Varied implementation

Economic Action Plan The Economic Action Plan was a federal stimulus and fiscal strategy introduced to address the 2008–2009 global financial shock and to support recovery in Canada under the 28th Canadian Ministry. It combined infrastructure spending, tax measures, and transfers to provinces and municipalities, and was administered alongside existing frameworks such as the Canada Pension Plan and programs influenced by decisions from the Bank of Canada and the International Monetary Fund. The initiative intersected with debates in the House of Commons of Canada, discussions at the G20 Pittsburgh summit (2009), and contemporaneous policies in countries like the United States and United Kingdom.

Overview

The plan packaged fiscal stimulus, regulatory adjustments, and targeted transfers aimed at stabilizing investment and employment after the Great Recession (2007–2009). It included infrastructure programs reminiscent of responses in Australia and Germany, tax cuts similar to measures in the American Recovery and Reinvestment Act of 2009, and social transfers comparable to actions by the European Commission in member states like France and Spain. Key architects referenced fiscal frameworks from the OECD and input from officials with experience at the International Monetary Fund and World Bank.

Historical Background

Following shocks linked to the collapse of Lehman Brothers and turmoil in the subprime mortgage crisis, Canadian fiscal authorities sought counter-cyclical measures. The plan was announced amid national debates involving provincial premiers such as the Premier of Ontario and finance ministers who had prior engagement with institutions like the Bank of Canada and the Royal Bank of Canada. Parliamentary scrutiny occurred through committees including the Standing Committee on Finance (Canada), while central-bank policy rates were set at levels influenced by deliberations at the Bank for International Settlements. Internationally, leaders at the G20 and analysts from the International Monetary Fund reviewed stimulus effectiveness across jurisdictions including Japan and China.

Objectives and Policy Measures

Primary objectives included preserving employment, accelerating public infrastructure, and maintaining household purchasing power in the aftermath of the Great Recession (2007–2009). Measures comprised accelerated capital cost allowance rules affecting corporations regulated under statutes like the Income Tax Act (Canada), enhancement of infrastructure programs akin to stimulus elements in the American Recovery and Reinvestment Act of 2009, and temporary tax relief resembling initiatives debated in the United Kingdom general election, 2010. The plan directed funds to public transit projects in cities such as Toronto, Montreal, and Vancouver; affordable housing programs linked to precedents set by the Canada Mortgage and Housing Corporation; and support for sectors including automotive suppliers in regions with ties to firms like Magna International and Bombardier.

Implementation and Administration

Administration relied on federal departments and agencies such as Finance Canada, the Canada Revenue Agency, and the Infrastructure Canada portfolio, with coordination involving provincial counterparts like the Government of Ontario and municipal governments including the City of Toronto. Key officials included ministers who had engaged with institutions such as the International Monetary Fund and the OECD. Delivery mechanisms used existing programs at Crown corporations like the Canada Mortgage and Housing Corporation and funding agreements modeled on intergovernmental accords similar to those seen in Canada–United States relations. Parliamentary oversight occurred through the Treasury Board of Canada Secretariat and multiple hearings in the House of Commons of Canada.

Economic Impact and Evaluation

Evaluations referenced estimates from the Parliamentary Budget Officer and analyses by academic economists at institutions such as the University of Toronto, McGill University, and the University of British Columbia. Empirical studies compared employment outcomes to benchmarks from the United States Department of Labor and productivity assessments akin to research at the Conference Board of Canada. Impact assessments examined short-term GDP effects relative to trajectories observed in Australia and Germany, fiscal multipliers discussed in publications by the International Monetary Fund and Organisation for Economic Co-operation and Development were applied, and long-term infrastructure returns were debated in journals associated with the Royal Society of Canada.

Criticisms and Controversies

Critics included opposition parties in the House of Commons of Canada, think tanks such as the Fraser Institute, and commentators writing in outlets like the Globe and Mail and the National Post. Controversies focused on the allocation of funds to projects tied to local constituencies, comparisons with stimulus transparency in the United States, and concerns raised by economists affiliated with the C.D. Howe Institute about the size and targeting of measures. Debates mirrored international disputes over stimulus timing seen at the G20 and in policy dialogues involving the International Monetary Fund and World Bank.

Category:Public policy in Canada