“Damned if you do, damned if you don't,” observed one member of the COMPAS business panel. This perspective may well capture panel opinion of how the federal government committed monies for infrastructure in an effort to combat the economic slowdown.

Members of the panel were asked for their opinions of federal actions to combat the recession in light of a Fraser Institute report on the subject. Panelists are united to an unusual extent in concurring with a Fraser study asserting that tax cuts greatly outperform spending increases as a way of encouraging economic growth, as shown in table 2a.

Panelists also agree, although to a lesser extent, that “the Government of Canada’s infrastructure spending has made no significant contribution to the recovery of our economy, which is recovering for entirely different reasons,” as shown in table 2b.

Respondents were asked to what extent they concurred with each of several possible explanations for the federal government’s infrastructure spending commitments. The top three reasons, in their view, are the public’s intense desire for the government to do something, pressure from all the other G8 governments to coordinate massive spending, and the fact that the Harper government is a minority government, as shown in table 3c.

The least persuasive reason in a list of six such reasons is the view that the Harper government believed that infrastructure spending would be key to recovery. Fewer than 50% of panelists take the view that the Harper government actually believed that the infrastructure budget would do much good.

Less than a majority believe that massive spending by the Federal Government was essential to help Canada get through the economic crisis, as shown in table 2d. Meanwhile, a two-thirds majority believe that “the Government of Canada should have budgetted a smaller amount since massive spending can be harmful in the long run.”

These are the key findings from this past week’s Internet survey of CEOs and business leaders on the COMPAS panel. The weekly business survey is undertaken for Canadian Business magazine under sponsorship of BDO Dunwoody LLP.

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