Canadian Finance Minister Jim Flaherty says the Canadian economy needs Corporate Canada to start spending the $525 billion in cash and other liquid assets that it has on hand.

Since the financial crisis of 2008, Canadian corporations have been increasing their current assets in an effort to create a larger liquidity cushion to mitigate the risk from possible future economic volatility. The Finance Minister says spending or paying out as dividends some of the half a trillion dollars in cash and cash equivalents would boost the economy at a time when growth is lacklustre.

Bank of Canada Governor Mark Carney backed Flaherty’s view last week, telling a Canadian Auto Workers union audience that the corporate cash reserves are “dead money” and that “[the corporate executives’] job is to put money to work and if they can’t think of what to do with it, they should give it back to their shareholders.”

Not every one agrees with Mr. Flaherty and Mr. Carney’s assessment. Mark McQueen, President & CEO of Toronto-based Wellington Financial, and a regular contributor to financial analysis website SeekingAlpha, provided his dissenting view in an article published yesterday:

The international financial crisis is still a very recent memory for most in business, and it cannot be denied that Greece, Spain and Italy currently appear to be the sovereign versions of Bear Stearns, Lehman Brothers and Morgan Stanley circa August 2008. Telling a CFO to “get out there and spend” with that backdrop is kind of like advising a heart patient who recently went through an angioplasty procedure that he should rush headlong back to Bardi’s Steakhouse for his favourite 24 ounce Rib Eye.

Then there’s the specific details of these allegedly high corporate cash levels. … When you tally up the debt figures, it tells a different story. None of these poster children have net cash on hand. Whether or not they are underlevered or overlevered entities depends upon their business fundamentals: such as trailing and forecast EBITDA, net income and free cash flow. Those metrics, and their sustainability in the face of a global recession, are the only way to truly gauge whether or not these three media examples are cash rich or digging their way out of an earlier debt hole.

Canadian non-financial corporations have historically held cash with a combined value equivalent to 10 percent of GDP, much less than the 30 percent of GDP that it is worth today.