Recession will be coming to Canada, but to a degree and a depth that is largely unknown. On an individual basis, the prospect of a job loss is becoming known through either an immediate threat or by way of hearing about someone close who has just been laid off. Canada is about to embark on an economic journey that will become unpleasant and personal. The following are suggestions about what needs to be done to limit the damage.

(1) Our political masters in Ottawa should stop their clowning around. The latest developments, with the Liberals, NDP and Bloc Québécois, threatening to form a coalition government to take over from the Tories, is an unwelcome prospect at a time of great global economic uncertainty.

Mr. Harper brought this on himself with partisan political proposals in last-week’s economic statement and a rose-coloured-glasses approach to the economy. He has already backtracked on two key issues – eliminating public funding for political parties and forbidding public sector unions to go on strike. The third major issue, the lack of adequate stimulus for the economy, is likely to be addressed in the next federal budget, which is being brought forward to January 27th, 2009.

The opposition parties should re-think what they are planning to do. They do have the right to bring down the government and attempt to set up a coalition government, even though this would bring together a disparate group of ideologies and alliances. The inherent instability suggests a relatively short shelf life. Canadians do not want another general election so close to the last one.

This is insular Ottawa, where all that counts is infighting and career enhancement − in other words, the game of politics – at its worst. Few cast a vote in mid-October for Mr. Dion or Mr. Layton to become Canada’s next Prime Minister and nobody cast a vote in favour of Mr. Ignatieff or Mr. Rae to take over the reins of government. As for Mr. Duceppe, a vote for him was a vote against attempts to provide good governance at the federal level.

What is needed is a whole lot more co-operation in working towards the common goal of preparing for our coming economic problems. That is the approach that is being adopted by President-elect Obama in the United States as he assigns cabinet positions and prepares to govern.

(2) Canada has to be a full participant in the world-wide initiative to right the financial system. This means assuring liquidity through further cuts in the overnight rate by the Bank of Canada. It means unlimited guarantees on bank deposits as have been adopted by governments in many other countries. And it means a ready willingness to step up with equity infusions from the public purse for the private sector banks if needed.

And (3), there has to be more fiscal stimulus. One can easily be an advocate of tax cuts of almost all stripes − personal, corporate, sales, etc., but it is a matter of what will be most effective. The chief benefit of a GST cut (or a sales tax cut provincially) is that it can become effective immediately. However, it is not clear that in the present circumstances, consumer spending stimulus will have the desired result. Also, governments will eventually need the money again and then it becomes painful to re-install tax levies.

Tax cuts also have another deleterious aspect. They are not 100% effective as a stimulus tool. In this particular brand of recession, defined by the financial crisis, the experience elsewhere has been that people are trying to pay down their debts. Therefore, any extra income is being siphoned off from stimulus into savings. And even when spent, there is a leakage factor as the goods purchased often come from outside the country.

The foregoing explains why the best route at this time may be infrastructure spending. It is often referred to as the “made at home” solution. It is money spent primarily on local goods and local labour. It is also highly visible, which has a positive psychological aspect. All of our governments have a ready wish list of infrastructure projects. The major downside is that there is a time lag (e.g., the bidding process) before spending can get underway. That is why an action plan should be set in motion as quickly as possible.

Bridges, roads, highways, water treatment facilities and sewer systems are all past middle age in most provinces. Now would be an excellent time to get on with upgrades and expansions. The safety of public structures has also become a major issue, in addition to the need for better services.

Also important are any measures to improve this nation’s ability to trade with the United States and the rest of the world. In this category, would be improvements to border approaches and crossings, as well as port expansions. Knowing what’s going on in the rest of the world, especially in emerging nations, with respect to trans-shipment facilities is a sobering thought with respect to our need to keep up. Electric power projects is another area where major investments need to be made sooner rather than later.

There is one more project that needs special consideration. Canada needs an oil pipeline from the Tar Sands to the West Coast, in order to offer at least the potential of sales to China and Southeast Asia. A number of major pipelines are being constructed to supply Alberta oil to the refineries of Texas and the U.S. Gulf Coast. Exclusive agreements can be risky for suppliers. Automakers and large retailers have been notorious for holding their dependent suppliers over a barrel when it comes to pricing and delivery terms. Canada needs the leverage of another option with respect to where it can sell its oil.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News.

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