Harper lays out stimulus spending in progress report

Roughly 3,000 infrastructure projects across the country are getting underway as part of the government's $22.7-billion stimulus plan, Prime Minister Stephen Harper said Thursday.

That action is "no small feat only 72 days into a new fiscal year," Harper said in a speech to a town hall meeting in Cambridge, Ont. He added that 80 per cent of the plan's funding has already been allocated.

Harper did not make any new announcements, highlighting instead a long list of public projects.

"We are on the right course. The only thing that can get us off course now is needless political instability," the prime minister said.

The infrastructure update is part of a quarterly report on the economy that was demanded by the Liberals as a condition for their support of January's budget.

"This represents the largest infrastructure renewal effort in this country in over half a century," Harper said.

Harper also used the speech to point to changes made to Employment Insurance in the face of a recession. He said the government will spend $5.5 billion more on EI benefits this year.

With the economy performing poorly, the unemployment rate has gone up. In May, the national jobless rate hit an 11-year high of 8.4 per cent.

Canadian unemployment has been rising since it hit its most recent bottom of 5.8 per cent in January and February of 2008.

"I know these are trying times for many Canadian families, those who have been affected, directly or indirectly, by the worst downturn in the world economy in half a century," said Harper.

Over the first three months of this year, the Canadian economy contracted at an annualized rate of 5.4 per cent an 18-year low although that was better than the annualized loss of 6.5 per cent that economists had been projecting.

In the last three months of 2008, the economy shrank at an annualized pace of 3.4 per cent.

The government said the budget deficit will hit $50.2 billion for the current fiscal year, butit will return toa surplus position. However, it did not repeat its earlier timetable of being back in the black by 2013-2014.

'We are on the right course. The only thing that can get us off course now is needless political instability.' Prime Minister Stephen Harper

On May 27, Finance Minister Jim Flaherty said the federal deficit will soar to more than $50 billion this fiscal year. That means the government's shortfall will be more than $16 billion higher in 2009-2010 than Flaherty forecast in January's budget.

The government reported Thursday that more than half the 200910 deficit is the result of temporary spendingunder the stimulus plan, reducedtaxes collected, higher EI benefits and the decision to freeze EI premium rates.

The remaining deficit of $23.2billion is primarily a reflection of the weak economy. The governmentexpects that willbe reversed as the economy recovers.

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