As a recession looms, I have been concentrating on what the Town and the Region can do to help the local economy.
After Canada’s prolonged period of general economic expansion, we must look to history to navigate our way out of the crisis.
The Great Depression, for example, offers some striking lessons. Various governments made the depression worse in four main ways:
1) Allowing a rapid contraction of the banking system (by not freeing up credit);
2) Allowing deflation (falling prices);
3) Enacting protectionist policies (by raising tariffs and other impediments to trade);
4) Balancing the books at all costs (by increasing taxes and curtailing government spending);
Thankfully, our National and Provincial leaders appear to have learned the lessons. And, municipal leaders must follow suit.
According to their website, the Bank of Canada has “acted swiftly to ensure that adequate liquidity is available to institutions within our borders.” The National Government has also increased the amount of insured mortgages that it will buy from financial institutions, thus increasing the available credit.
Now, after several years of surpluses, both the Premier and the Prime Minister have signaled that their Governments may faces deficits for 2008-09. And, while both have made moves to cut some discretionary spending, both have also reiterated the need to continue with longer-term investments – like on infrastructure.
So, what can municipal governments do to help the local economy? Should the Town and the Region stop investing in infrastructure and let roads and bridges deteriorate? Should we liquidate any reserves and give it back to you and other property tax payers?
Instead we need to moderate taxes while accelerating investments in much-needed infrastructure. As a recent Federation of Canadian Municipalities study uncovered, a “$2-billion tax reduction would produce fewer jobs and a lower economic stimulus than $1 billion dollars spent upgrading roads, bridges and water mains.” Second, in a recessionary market, we can expect lower costs and better value for your money.
That’s why I’ve been pushing so hard at the Region to move projects that were budgeted and taxed in previous years to tender as quickly as possible. (In fact, I am on a small sub-committee to accelerate capital works.) And, that’s why the Town is continuing to focus on the Build Canada grant – to secure Federal and Provincial funds that pays 66¢ of every dollar invested in Pelham to help build a stronger community for today and for the future.