Former RBC chief executive Gord Nixon is on board with Ottawa’s deficit spending, so long as the federal government ensures its purse strings don’t loosen significantly. In an interview on BNN, Nixon said he agrees with the overall plan to run a cumulative deficit of $118.6 billion over the course of the current government’s mandate, but said issues will arise if that figure begins to balloon.
“What I worry about is, it’s a slippery slope,” he said. “If you throw money at the economy, you’ve got to have a plan to stop throwing money when the economy starts to show a sign of improvement: that’s what I refer to as this balancing act.”
Nixon said the federal government’s main goal needs to be reviving sustainable growth from its currently tepid pace.
“Overall, growing the economy is, in the long-term, the solution to not running deficits,” he said. “There’s the top line and there’s the bottom line, and right now we have a top line that’s growing at one per cent. You know, it’s tough to run a country on one per cent growth, and at some point, that one per cent has got to turn into two, two and a half, three per cent.”
Nixon highlighted innovation and technology as possible drivers of that growth, but admitted he didn’t have all the answers for reversing Canada’s weak economic conditions.
“It’s tough because we live in a world where global economic growth is not great,” he said. “We also live in a country which is quite splintered [regionally] in terms of its relative economic performance.”
“It’s tough to generate great growth when the whole country isn’t firing on all cylinders”