Spend more, social think-tank urges
The Canadian Press
January 23, 2009

OTTAWA — A social think-tank says the Bank of Canada's recession forecast is too optimistic and drastic action is needed in Tuesday's federal budget.

The Canadian Centre for Policy Alternatives has released its annual alternative federal budget, calling for a stimulus package bigger than the one expected from Stephen Harper's government.

Marc Lee, the centre's senior economist, says the danger of the Conservative government's fiscal plan is that it will do too little in the face of a prolonged downturn, similar to what Japan faced in the 1990s….

The policy centre recommends a stimulus package of 2.15 per cent of GDP over two years – about $34-billion.

Mr. Lee said the federal government must also shore up the Employment Insurance system, invest in green infrastructure such as rapid transit and pour money into supporting hard-hit communities….

“Canadians expect a budget that will stave off the worst of the current recession, keep and create jobs, and lay the groundwork for a fairer, greener and more sustainable economy,” he said Friday….

“Tax measures should be targeted at low-income Canadians who are more likely to spend the money locally.”