Finance Minister Jim Flaherty speaks during Question Period in the House of Commons on Oct. 18, 2010.CHRIS WATTIE/Reuters
The pitch
Whatever their travails, Stephen Harper's Conservatives maintain they are the only party that can be trusted to rein in the deficit as Canada emerges from recession. The Liberals aim to take that message away from them.
Deputy Leader Ralph Goodale, Finance critic Scott Brison and Industry critic Marc Garneau delivered similar speeches Monday, in which the Liberals committed to reducing the deficit-to-GDP ratio to one per cent within two years of taking office. In 2009-2010 the deficit-to-GDP ratio was 3.6 per cent.
The Tories may be newly vulnerable on the fiscal file, as Finance Minister Jim Flaherty announced last week that the 2009-10 deficit was $55.6-billion - the largest in history and $1.8-billion over forecast.
The Liberals repeated their pledge to cancel planned corporate tax cuts and invest the money in targeted social programs.
The guffaw
"Imitation is the sincerest form of Flaherty," the Finance Minister joked with reporters, pointing out that the Liberal and Conservative deficit-reduction plans were essentially identical. As for Liberal plans to cancel corporate tax cuts, "the best estimate is that they would kill 400,000 jobs," Mr. Flaherty warned. That number is based on an assessment of the impact of both freezing corporate taxes and hiking the GST back up to seven per cent, which no Liberal has ever suggested.
The fight over corporate taxes could be a defining issue in an election. "We will cancel these extra Conservative corporate tax cuts until the budget is balanced," Mr. Goodale told the Economic Club of Canada. "We'll utilize the $6-billion per year to reduce the deficit, and to invest in the priorities of ordinary Canadians: learning, care, and leadership in the world."
They got the numbers wrong, Mr. Flaherty rebutted: Corporate tax cuts would only cost the treasury $4.6-billion when fully implemented.
Who you gonna believe?
Brian Lee Crowley, of the Macdonald-Laurier Institute, an Ottawa think-tank, is "delighted that both parties want to reduce the deficit in very short order," because it shows that Canadians expect their governments to balance the books. As Mr. Crowley puts it: "No one wants to own the deficit."
But the real question, he points out, is what programs would each party cut or what taxes they would hike, if growth weakens below projections? That's a question no party is ready to answer.
As for the claim that the Liberal plan would wipe out 400,000 jobs, "all politicians make exaggerated claims about the damage their opponents' policies will do," Mr. Crowley observed. But it's an economic fact of life, he added, that lowering corporate taxes creates jobs, and freezing those taxes, as the Liberals propose, would keep those jobs from being created.
Numbers at war
Deficit in 2012-13 as pledged by Liberals if they were elected next year, as percentage of GDP: 1.0 %
Projected deficit in 2012-13, as percentage of GDP, in federal budget: 1.2 %
When the budget gets balanced: Conservatives: 2015-16
When the budget gets balanced: Liberals: as soon as possible
Annual loss of revenues from corporate tax cuts, when fully implemented, according to Liberals: $6-billion
Annual loss of revenues from corporate tax cuts, when fully implemented, budget update: $4.6-billion
John Ibbitson