Economic Action Plan (2009)

Economic Action Plan (2009)
Name	Economic Action Plan (2009)
Date	2009
Location	Ottawa
Participants	Stephen Harper, Jim Flaherty
Outcome	Federal fiscal stimulus program

Contents

Economic Action Plan (2009) was a federal fiscal stimulus announced in 2009 by Stephen Harper and administered by Jim Flaherty aimed at countering the effects of the Great Recession and the 2008 financial crisis. The plan combined tax measures, infrastructure spending, and transfers administered through entities such as the Department of Finance (Canada), the Canada Revenue Agency, and provincial executives including Alberta, Ontario, and Quebec. It was contemporaneous with stimulus efforts like the American Recovery and Reinvestment Act of 2009 and influenced by analyses from institutions such as the International Monetary Fund, the World Bank, and the Organisation for Economic Co-operation and Development.

Background

In late 2008 and early 2009, global shocks from the Lehman Brothers collapse, the Icelandic financial crisis, and disruptions in global credit markets prompted responses from leaders including Barack Obama, Gordon Brown, and Angela Merkel, while Canadian ministers such as Stockwell Day and central bankers like Mark Carney monitored financial stability. Domestic indicators—industrial output reported by Statistics Canada, housing starts tracked by provincial ministries, and employment data compiled by the Labour Program (Canada)—showed declining activity similar to trends documented in the United States recession of 2007–2009 and the European sovereign debt crisis. Policymakers drew on fiscal policy theory from thinkers associated with John Maynard Keynes, empirical studies by Christina Romer, and modelling from the Bank of Canada to design a stimulus that balanced short-term demand support with concerns raised by the Parliament of Canada and the Office of the Auditor General of Canada.

The plan included tax cuts administered via the Canada Revenue Agency, capital cost allowances influenced by the Canadian Chamber of Commerce, targeted infrastructure programs coordinated with the Federation of Canadian Municipalities, and transfers to provinces negotiated under frameworks involving the Council of the Federation and premiers such as Danny Williams and Gordon Campbell. Major elements were accelerated infrastructure funding similar in scope to measures in the Stimulus (Spain) and the Australian Government stimulus package 2009, a home renovation tax credit analogous to initiatives discussed by Habitat for Humanity, and support for the auto sector where players like Magna International and Ford Motor Company of Canada operated alongside unions such as the Canadian Auto Workers. The package also featured assistance for the housing market that intersected with policies from the Canada Mortgage and Housing Corporation and banking measures involving institutions like the Royal Bank of Canada, the Toronto-Dominion Bank, and the Bank of Montreal.

Implementation was overseen by ministers from the Harper Cabinet and coordinated with the Privy Council Office, with program delivery through agencies including the Infrastructure Canada portfolio and the Canada Employment Insurance Commission. Parliamentary scrutiny occurred in committees such as the House of Commons Standing Committee on Finance and the Senate Finance Committee, while auditing and reporting obligations involved the Office of the Auditor General of Canada and actuarial assessments from the Office of the Superintendent of Financial Institutions. Intergovernmental agreements referenced precedent from the Canada Health Transfer negotiations and administrative mechanisms similar to those used in federal-provincial accords like the Atlantic Accord.

Short-term macroeconomic effects were evaluated using models deployed by the Bank of Canada, the Department of Finance (Canada), and external analysts from firms such as TD Economics, RBC Economics Research, and think tanks including the Fraser Institute and the C.D. Howe Institute. Metrics tracked included GDP growth reported by Statistics Canada, unemployment rates monitored by the Labour Program (Canada), and fiscal balances published in federal budgets tabled before the House of Commons of Canada. The program contributed to fiscal deficits recorded in budgets presented by Jim Flaherty and influenced credit ratings assessed by agencies like Standard & Poor's, Moody's Investors Service, and Fitch Ratings.

Reaction came from party leaders including Michael Ignatieff, Jack Layton, and Gilles Duceppe, from economists such as Kevin Page and commentators in outlets like the Globe and Mail, the National Post, and the Toronto Star. Critics in the Fraser Institute and editorial boards questioned the magnitude and targeting of spending, while proponents cited multiplier estimates from academic studies by Olivier Blanchard and Paul Krugman. Labour organizations such as the Canadian Labour Congress and business groups including the Canadian Federation of Independent Business offered contrasting assessments, and provincial governments including Nova Scotia and British Columbia debated allocation and timing.

Long-term outcomes influenced federal fiscal frameworks, debt management strategies overseen by the Department of Finance (Canada), and policy debates in subsequent elections involving figures like Justin Trudeau and Stephen Harper. The stimulus informed infrastructure policy at agencies such as Infrastructure Canada and financing models later used by entities like the Canada Infrastructure Bank and the Canada Mortgage and Housing Corporation. Comparative studies by the International Monetary Fund and the Organisation for Economic Co-operation and Development evaluated the plan alongside the American Recovery and Reinvestment Act of 2009 and stimulus measures in Germany and Japan, shaping scholarly work by economists at universities including University of Toronto, McGill University, and Queen's University.

Category:2009 in Canada Category:Fiscal policy