By Keith Halladay -- The federal government, under heavy pressure from opposition parties to do something about the economy, has finally produced a stimulus budget. It is massive, and it includes plenty of new money for the North.

Given the global economic crisis, the government is probably right to run a large deficit. Even the normally debt-phobic International Monetary Fund has endorsed the plan. The main question now is whether our politicians can strike the right balance between spending the money quickly to save jobs and spending it sensibly on projects that create a legacy.

This will not be easy. The budget contains enormous spending plans across dozens of programs. It plans a $33.7-billion federal deficit, including $6-billion spent on infrastructure, $4-billion on housing and $6-billion in various tax and employment insurance goodies. Then there are hundreds of billions of dollars invested to support personal and business lending (under government accounting rules these don’t count towards the deficit). The list of initiatives runs for 20 pages.

It amounts to $1,000 of deficit spending per second next fiscal year. And the spending will continue for years, although the deficits will shrink later if the government’s forecasts come true. This would require a short – though sharp – recession rather than the lengthy slowdown predicted by many private sector forecasters.

There are some big-ticket items for the North in the budget. Social housing gets $200-million, with half going to Nunavut and the rest split between the Yukon and the NWT. That’s an additional $3,000 in federal spending per person in Nunavut on social housing. Another $140-million over five years will launch a Northern economic development agency, and there is $87-million for Arctic research, which might lead to the establishment of a flagship Arctic research station.

For the resource industry, the 15 per cent mineral exploration tax credit has been extended. Whether this is enough to convince shell-shocked investors to send exploration money North is another question. There is also $40-million for continued study of the Mackenzie Valley gas pipeline. Aboriginal issues were also a theme through the budget: More than $1.4-billion will be spent across Canada for various health, skills training and other programs.

Northerners will also benefit from national initiatives, such as higher income tax thresholds and initiatives aimed at lowincome Canadians, including a doubling of the Working Income Tax Benefit. Small businesses will benefit from some modest tax relief and new borrowing programs.

Many interest groups in Canada are pleased by the new spending. But one lobbyist’s strategic investment is merely pork to the rest of us. We face two key questions. First, is the big, new deficit a good idea? It likely is, given the severity of the economic crisis. At two per cent of gross domestic product, the 2009-2010 deficit’s size is in line with the advice of the International Monetary Fund.

It also appears to be affordable. If all goes according to plan, the federal debt will stay below 30 per cent of gross domestic product. This is much lower than most countries and is a testament to the debt repayments of the last decade. The Americans are in much worse shape, thanks to George W. Bush’s enormous deficits in the good times.

The second question is whether the money will be spent wisely. That is an important question in the North, where swapping tales of government boondoggles is a favourite pastime. There is a trade-off between spending money quickly and spending it wisely. We need to make sure the spending creates lasting legacies.

President Barack Obama has set the tone. He promised to avoid the political pork-barrelling that has made the U.S. budget process notorious. Instead, it would focus on renewable energy, education facilities and Internet infrastructure.

We face the same questions in the North. In the Yukon for example, Yukon Energy – the territory’s publicly-owned electrical utility – has proposed major investments in new hydro capacity that would reduce carbon emissions and dependence on fossil fuels, and help insulate the territory from global energy prices. But the government is also said to be considering many other schemes with less tangible long-term benefits, such as a social housing project where the cost per apartment exceeds the price of a typical Whitehorse house.

So expect ongoing flurries of government spending announcements. But save your applause for the ones that create a lasting legacy, rather than a new generation of legendary Northern boondoggles.