It may just have been the universe having a laugh but as I was reading the Liberal election platform, “Won’t Get Fooled Again” fired up on my random playlist.
It was a timely reminder that the fiscal projections the Liberals swear you can take to the bank are likely to prove as reliable as a builder’s estimate.
After all, the 2015 platform suggested by this time the budget would be in surplus, after three years of “modest” deficits and the debt to GDP level would be 27 per cent.
In the event, deficits have been four times the Liberal forecast, surplus is a distant speck on the horizon and debt as a function of the economy is considerably higher.
As one Liberal staff member told me, that “sprawling” platform was put together by a third-place party that had been out of power for a decade and was throwing things at the wall. When he asked how they would fulfill all the hundreds of promises, he was told, “We’ll only have to if we get elected.”
So a healthy degree of skepticism is warranted when reading through the 2019 iteration.
It is less grandiose in its ambitions – it plans to spend a mere $56 billion over the next four years, rather than the whopping $149 billion in its predecessor.
The Liberals forecast a deficit of $27.3 billion next year, which would see debt to GDP come in at 30.9 per cent. This would dip gradually to 30.2 per cent by 2023/24 – a gently declining fiscal anchor that re-assures Canadians that spending is under control.
Again, if you have a low tolerance for innovative book-keeping, you might question the $5 billion the Grits say they will raise in new revenue next year, particularly the $2 billion from a “government spending review”.
Justin Trudeau has been hammering the Conservatives for spending cuts that are anticipated in the Tory platform, but it seems he plans service cuts of his own.
Even if you take the Liberal numbers at their face value, the commitment to add $9 billion to the deficit is imprudent to the point of recklessness, given the global economic slowdown, or even a recession, that is almost upon us.
The calculations made in the platform assume the baseline of revenue will remain the same over the next four years. But it won’t. A half per cent drop in growth costs the federal government around $2 billion. When government revenues start drying up, and the debt to GDP level rises, the Liberals’ last fig leaf of fiscal respectability will be blown away.
Yet, just as with the “third party promises” in 2015, the Liberal plan assumes that Trudeau is back in the Prime Minister’s Office before voters discover he’s in the altogether.
Trudeau believes that Canadians no longer care about deficits or debt – and he appears to be right.
The platform is built on a solid bed of wishful thinking
Rather, they want to be protected from rapid and unpredictable change by government intervention. The Liberals have obliged in spades – in Justin Trudeau’s Canada everybody is benefitting. Children, young mums, seniors, the precariously employed and the unemployed are all benefitting from enhanced benefits.
Kids are paid to go to camp and to museums and there’s a shiny new federal Family Day holiday.
There is no part of the electorate that has not been swaddled in the soft cotton of public spending.
It may help Trudeau win the affordability battle – how can Andrew Scheer possibly match $56 billion in new spending and balance the books in five years?
But little thought seems to have been devoted to growing the economy to ensure that deficits do not start to run out of control. Even in 2015, lip-service was paid to the idea that “investments” were needed to spur growth.
Not this time – the platform is built on a solid bed of wishful thinking; that the golden goose will keep laying.
“It must be the first time in the history of the Liberal Party that the economy is not a major plank of the platform,” said one person involved in previous Grit manifestos.
It is astounding that Ralph Goodale, a former finance minister, was co-chair of the Liberal platform committee. Perhaps he should go back and re-read one of his own budget speeches, such as the one from 2005.
Back then, balancing the budget was not just good economic management, it was “good economic common sense” he said, creating the discipline to “pay as you go, not spend as you like”.
“It ensures the decisions we make today do not become the debts our children will have to bear,” he concluded.
Quite.
Goodale’s 2005 budget was the eighth straight to be in the black – the longest string of unbroken surpluses since Confederation.
But just 10 years earlier, the Wall Street Journal had called the loonie, “the northern peso” and referred to Canada as “an honourary member of the Third World”.
It was Liberal governments that dragged Canada back from the brink – aided by a Progressive Conservative free trade deal with the U.S. and the introduction of the goods and services tax.
It is a very different type of Liberal Party that is now taking risks with the country’s future prosperity.
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Copyright Postmedia Network Inc., 2019
