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Liberal Leader Justin Trudeau speaks to supporters in Toronto this week.Paul Chiasson/The Canadian Press

Until Thursday morning, the three leading federal political parties appeared to be agreed that, when it comes to the deficit, this election would be fought according to the Conservative Party's ground rules: Deficits are bad, balanced budgets are good, and a government's competency is determined by which side of the line its budget lands on. And then Justin Trudeau's Liberals decided to try to change the rules of the game.

The Liberals' new economic plan is built around a promise to deliberately run deficits – up to $10-billion a year for the next two years, with the money used to nearly double federal infrastructure spending. That infrastructure spending, goes the Liberal argument, would stimulate the economy, increase productivity and make Canada more prosperous.

The plan raises three questions: Does it matter if Canada runs small deficits for the next few years? Would spending tens of billions more on infrastructure be a good idea? And could it give the economy a long-term boost?

The answers: No, maybe, and it depends.

No, it does not matter if Canada is a few billion dollars in the red. The Stephen Harper government's long-standing commitment to balancing the budget this year, or else, is important to the Conservative brand, but it's fiscally irrelevant. The same goes for the NDP's political need to insist that, on deficits, it will be as Tory as the Tories. No magical thing happens if the budget goes from a small deficit to a small surplus. No calamity will befall the country if it does not.

When it comes to the federal government's fiscal health, what matters is the country's debt-to-GDP ratio – the debt relative to the size of the economy. Canada's is the lowest in the G7 and marching steadily downward, even with small deficits. So long as deficits are relatively small – and in a huge economy like Canada's, relatively small means roughly $20-billion or less – the debt-to-GDP ratio will continue falling. Which, to repeat, is what matters. No, the Liberal deficit plan will not blow a hole in the fiscal house.

The Conservatives and the NDP, by promising immediate budget balance, are the equivalent of a family paying off its mortgage on an accelerated schedule, and having to forgo some spending or find new revenue to make that possible. The Liberals are like a family paying off its mortgage on a slower schedule, believing that the extra money can be put to more productive uses than debt reduction.

Are the Liberals right? Maybe. The country clearly has significant infrastructure needs. Mr. Trudeau's federal Liberals have to some extent lifted their platform from Kathleen Wynne's Ontario Liberals, who won an election on it last year. Improvements in, for example, mass transit are desperately needed in the vote-rich Greater Toronto Area. The same can be said of Canada's other cities.

But it's not as if the Conservative government has been against infrastructure spending. The 2015 Budget – sorry, "Economic Action Plan 2015" – proudly details the upward march of federal infrastructure spending under the seven-year Building Canada Plan of 2007, the 10-year New Building Canada Plan of 2014, the Canada 150 Community Infrastructure Program and the Public Transit Fund. Federal infrastructure spending is at more than $5-billion a year and rising.

For all their talk of smaller government, the Conservatives have not shied away from paying for a lot of ribbon-cuttings and shovels in the ground. Just days before the election call, there was Defence Minister and Calgary MP Jason Kenney announcing $1.5-billion for Calgary's new Green Line LRT. A few weeks earlier, Mr. Harper announced that Ottawa would be paying up to $2.6-billion to help build Toronto Mayor John Tory's pet SmartTrack transit project, "once a formal application has been received and approved." So a transit scheme cooked up to win a mayoral election, and which was not any of the regional transit agencies' first order of business, has now been promised billions of federal dollars – before there's even a finished plan for spending those dollars. But hey, it's infrastructure.

All of which points out the devil in the details of the Liberal plan. With interest rates as low as they are, it may make sense to pull future infrastructure investment into the present. Economists ranging from Harvard professor and former U.S. treasury secretary Larry Summers to former Bank of Canada governor David Dodge favour the idea; Mr. Summers in particular speaks of it as a "free lunch" that will pay for itself. If the money is well invested, it will deliver higher economic productivity. If it is poorly invested, it won't. When politicians are in charge, that can be a challenge. Their bottom line is immediate electoral benefit, not long-term economic returns. They are vote maximizers, not profit maximizers.

Just look at how things have gone in Canada's largest city over the past two decades. Political calculation, not economic reason, built the Sheppard subway. Political math, not a sound accounting of costs and benefits, is promising to build a multibillion-dollar subway to Scarborough. Political reality, not a rational business case, has Toronto seriously considering pushing a SmartTrack train and a subway through some of the same low-density Scarborough neighbourhoods.

Bad things can happen when politicians get excited by the promise of flashy new infrastructure. From Ontario's Green Energy Plan to Alberta in the 1970s and '80s expensively and mistakenly subsidizing new industries, politicians have a poor record of picking winners.

That's the challenge for Mr. Trudeau's Liberals: He and his party have to prove to Canadians that, under this plan, their money would be invested prudently, wisely and at arm's-length from the politicians. They have seven more weeks.

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