Has it ever been easier to make a political promise in Canada than it is today? Our major federal parties, including the Conservatives, are falling over each other on the campaign trail trying to outspend the other.
Each one of the major national parties has promised tens of billions in new spending programs or tax deductions. In fact, if there’s one area all these parties agree on today, it’s that the time has come to charge it. Interest rates have never been lower, and it’s never been cheaper to run up a government tab. If those interest rates go up, things could change quickly for our federal government, but presumably, that’s a problem for another time.
In their platform costing released over the past week, despite all their different plans, the parties all forecast they would run a deficit of just above $300 billion in total over the next five years. (That’s on top of the $314 billion in debt the feds racked up during the first year of the pandemic.) But how the parties plan to spend this bonanza, and how they account for it, differs wildly. There is plenty to raise eyebrows in each party’s platform.
Here’s what the party leaders should be saying about their opponents’ plans.
Liberal Party of Canada
- Total deficit over five years: $336.1 billion
- Added spending over five years: $78 billion
- New taxes collected over five years: $25.5 billion
Opponents’ talking point: “You’re not being serious.”
Justin Trudeau’s Liberals have made a $30-billion national child-care subsidy the cornerstone of their campaign, but some of the other items in their costing read like a children’s fairy tale. The Liberals plan to raise an additional $25.5 billion in revenue over five years, but nearly half of that ($11.9 billion) will come from the Canada Revenue Agency doing more to stop tax evasion.
Uh, yeah. Sure. We have seen the governing Liberals fail completely in their supposed efforts to get rich people to stop using offshore tax havens. In the budget they released in 2016, they promised to boost the CRA’s budget by $800 million in order to reap billions in uncollected taxes. It has produced no results so far.
Now they are promising the same thing again. There is no reason to believe the Liberals have suddenly decided to shatter their wealthy donors’ retirement strategies.
Then there is the Liberals’ promised tax on house-flipping, part of their effort to address housing affordability. That tax is expected to bring in a paltry $8 million or $9 million per year. From this we can conclude one of two things: The Liberals either plan to make the house-flipping tax so small that it will be a couple of hundred bucks per home sale, or they don’t actually plan to collect it and have intentionally projected the revenue to be a rounding error.
For Jagmeet Singh and Erin O’Toole, the line to use against Trudeau’s plan is simple enough: You’re not being serious, and you’re probably not being honest either.
Conservative Party of Canada
- Freeland set to table 2024 federal budget in the House of Commons
- All a-boot tradition: A look at finance ministers’ budget shoes through the years
- Inflation ticked higher in March. Are Bank of Canada rate cuts still in the cards?
- Food service strike: Air Canada, WestJet refine menus at Toronto Pearson
- Total deficit over five years: $319.7 billion
- Added spending over five years: $51.3 billion
- New taxes collected over five years: None specified
Opponents’ talking point: “A liberal budget, only more fake.”
Erin O’Toole’s policy platform is about as liberal as Conservative platforms get. The one thing that makes his platform look more fiscally conservative than Trudeau’s is a fig leaf: The promise to balance the budget within 10 years (without cuts to programs or services). That would certainly contrast the Tories with Trudeau’s Liberals: the latest forecast from the parliamentary budget officer (PBO) has Canada balancing the budget sometime around 2090.
But conveniently for O’Toole, the PBO’s forecasts, on which the parties base their own, only project up to five years, which means the Conservatives’ costing plans don’t show us the numbers all the way to a balanced budget, so we can’t see what they would actually do to get there. They say they will control increases in program spending better than the Liberals. But if those increases exist to keep up with rising costs, then a smaller increase will, in effect, mean a cut to services. That’s the part that doesn’t show up in the numbers.
This is a theme through the Conservative budget. The promise to increase health-care transfers to the provinces by $60 billion is mostly pushed past the five-year outlook. Only $3.6 billion of that appears in the first five years. Want the rest? Re-elect the Tories…
The line for Justin Trudeau and Jagmeet Singh should be, “You’re faking your new-found liberalism, Erin.”
New Democratic Party
- Total deficit over five years = $314 billion
- Added spending over five years = $214.5 billion
- Total new taxes over five years = $166.3 billion
Opposition talking point: “You’re looking at the world through rose-coloured glasses.”
Oddly, the NDP’s platform might be the most fiscally responsible one, in that it at least attempts to cover a majority of its new spending with new revenue. But that means some $166 billion in additional taxes over five years, targeted at businesses, fortunes over $10 million and profits on investments.
To pay for a new national prescription-drug benefit, the construction of 500,000 affordable homes, a new renters’ benefit and the removal of interest from student loans, the NDP plans to hike taxes on businesses and capital gains (profits from investments), including on second homes and investments not in an RRSP or TFSA, and introduce a one per cent annual wealth tax on fortunes above $10 million.
And this is where Jagmeet Singh gets to take advantage of the way the PBO forecasts spending. It doesn’t take into account the economic impact of new policies. So, for instance, if the wealth tax causes thousands of rich people to shift their wealth abroad, as it did in France in the 2010s, that won’t show up in the NDP’s costing estimates. They claim they will collect $60 billion from the wealth tax over five years, even if other countries’ experience shows it won’t be anywhere near that. High-flying Canadians will almost certainly take action to avoid a tax that will cost them a minimum of $100,000 per year.
The NDP argues they will finally get the rich to pay their fair share, but the other party leaders can argue the NDP is looking at the world through rose-coloured glasses.
Green Party of Canada
- The Green Party has not yet released a platform costing estimate.
Opposition talking point: “Show us your numbers!”
The Green Party has been a little late to the game in this election cycle. They only released a complete platform on Sept. 7, and are still waiting for the PBO to get back to them with the costing on their promises.
That would be useful because the Greens have arguably the most ambitious spending agenda of any party. Their platform includes a “guaranteed livable income,” a sort of universal basic income that would vary in amount depending on the region where you live, with higher payments in more expensive areas.
The Greens haven’t offered the amounts that these livable incomes would pay, but the PBO has estimated that a universal basic income scheme would run Canada between $30.5 billion and $71.4 billion per year, depending on how it’s designed. Just a few years ago, that would have been a nosebleed level of spending for a new program, but in the wake of the giant COVID-19 spending spree, it’s not that out of line with the kinds of proposals the other parties are making.
Still, it would be useful for voters to see exactly what the Greens are planning, and what they figure it will cost. “Show us the numbers!” should be the rallying cry.
Daniel Tencer is an independent journalist whose work has appeared at HuffPost, Postmedia and elsewhere. He is based in Montreal.
Comments