BUSINESS

Economic Action Plan Wrong Approach To Fight Unemployment, Report Says

07/25/2013 02:31 EDT | Updated 07/25/2013 02:44 EDT
CP

Canada took the wrong approach in its tackling of unemployment during the recession, a report by the University of Calgary's School of Public Policy says.

The report, titled Trends, Peaks, and Troughs: National and Regional Employment Cycles in Canada, says national one-size-fits-all strategies like the Economic Action Plan don't work, and it emphasizes that "action plans" must be targeted at a region's specific issues.

"A nationally applied policy response will be appropriate for some regions of the country but inappropriate for others; it will be too weak a response in some areas while being too strong in others; and it will be applied too late in some regions and too soon in others," write the authors, Ron Kneebone and Margarita Gres.

But the problem with a targeted action plan, according to the report, is that the time and political challenges it would involve raises the question of whether any such plan —tailored to specific regions in specific times — could be implemented at all.

"Governments, impatient to show they are taking action, hastily create plans that may cause them to spend needlessly — or even harmfully — in some provinces while possibly coming up short in provinces facing the deepest economic crisis," Kneebon and Gres write.

The Harper government hasn't hesitated to throw the big bucks and get the big guns behind its economic action plan.

Finance Minister Jim Flaherty defended spending more than $100 million on the "economic action brand" since 2009, saying "Canadians are entitled to know what their government is up to," CTV reported in May.

Kneebone and Gres' report recommends focusing on "automatic stabilizers" instead of figuring out how much of a financial boost each province needs. The stabilizers — tax adjustments, employment insurance and social assistance — would be ready to "naturally kick in precisely where and when they are needed."

"With the right formula of automatic stabilizers responding quickly and precisely to economic contractions, the main job left for politicians would be persuading the public that resorting to action plans and national strategies is something we are better off avoiding," the report says.

Also on HuffPost

Cities With Fewer Jobs Than Before Recession