Skip to main content

Liberal leader Justin Trudeau addresses supporters while touring a crane operator training facility in Oakville, Ont., on Thursday.Paul Chiasson/The Canadian Press

The Liberal Party is promising to run deficits of up to $10-billion a year over the next three years, touting a new infrastructure program as the best way to create economic growth and help balance the books by 2019.

Justin Trudeau's pledge is putting the Liberal Party in a starkly different position than the Conservative Party and the NDP, which are both promising balanced budgets. Over all, the Liberals would boost federal infrastructure spending by $60-billion over the next decade, on top of the currently planned spending of $65-billion.

Combined with a promise to increase taxes on the richest Canadians – in order to provide a tax cut to members of the middle class – the Liberals are putting forward a plan that is clearly to the left of the New Democrats on key issues.

"This election is a clear choice between smart investments that create jobs and growth, or austerity and cuts that will slow our economy further," the Liberal Leader said in Oakville, Ont.

The economy has become the dominant issue of the campaign, with turmoil in global markets, plummeting oil prices and a slowdown in Canada forcing all three major parties to adapt their policies and their political offerings. The leaders are campaigning in Ontario these days to unveil those economic promises.

Conservative Leader Stephen Harper mocked the Liberal proposal as conducive to large deficits and looming tax hikes, urging voters to "stay the course" in the next election.

"We already raised our infrastructure spending in this country by three times what the previous government was doing, and we've done it while balancing the budget and lowering taxes," Mr. Harper said at a campaign stop in Markham. "What these guys will do, what they will do with spending they cannot finance, they will inevitably raise taxes that will hurt Canadians and kill jobs."

Mr. Harper added that in times of "modest growth, you don't return the country into deficit."

The Conservatives argued that at $53-billion over 10 years, their New Building Canada Plan is the "largest long-term infrastructure plan in Canadian history," while keeping the government out of a "structural deficit."

NDP Leader Thomas Mulcair promised different strategies than the current Conservative government to balance the books, saying he would bring down spending on the Senate, get rid of subsidies to the oil industry, reverse income-splitting for families and stop fighting First Nations in the courts.

"Our first budget will be a balanced budget," Mr. Mulcair said. "We've got a clear plan to help the middle class, to create jobs. Mr. Harper's plan is not working."

The NDP has promised to increase the gas-tax transfer to the provinces for municipal infrastructure projects by $1.5-billion a year by the end of a first mandate, to an annual total of $3.7-billion a year. Mr. Mulcair is also proposing a Better Transit Plan that would invest $1.3-billion a year over 20 years on public transit.

"[Mr. Trudeau's] plan is unaffordable," said Carolynn Ioannoni, the NDP candidate in Niagara Falls. "There is a need for an increased commitment by the federal government, but not at the cost of running the deficit that they are speaking about."

The Liberals have criticized the Harper government for running eight straight deficits, but are now pledging to continue in the same vein as they trail the Conservatives and the NDP in most recent polls. Still, Nanos Research has found that 54 per cent of respondents in a recent poll either "supported" or "somewhat supported" a new round of deficit spending by the federal government to stimulate the economy. By comparison, 36 per cent of respondents said they opposed the measure.

The Liberal plan would focus spending on transit, and social and green infrastructure, with a boost of $5-billion a year over the next two years. The spending would then drop to $3.6-billion a year for two years, to help the government balance the budget, before increasing to an additional $9.6-billion in spending in 2025-26.

"Every dollar we spend on public infrastructure grows our economy, creates jobs and strengthens our cities and towns," Mr. Trudeau said. "Canada's economic growth was made possible by building ambitiously. We must do so again if we are to transform our transit and transportation systems, create more liveable communities and ensure that we adapt to a changing climate."

Mr. Trudeau defended the plan to stay in the red by saying that interest rates are low and that Canada benefits from a strong debt-to-GDP ratio. He added that a Liberal government would sign agreements with the provinces – along the same model as the gas-tax transfer – to provide "long-term, stable and predictable funding for provinces, territories and municipalities."

The Federation of Canadian Municipalities applauded the promise, stating that "investments of the scale proposed today will create jobs, strengthen the economy and make our communities more resilient."

Toronto Mayor John Tory welcomed the announcement, stating that such spending was "critical as we focus on building transit, cutting congestion and making badly needed repairs to affordable housing."

By talking about running a deficit and raising taxes, Mr. Trudeau is arguing that he is simply telling the truth to Canadians, instead of waiting to find out the government's true fiscal situation after the election.

"We are focused on creating the growth that is necessary so that we can grow back into balance, out of Mr. Harper's deficits, by 2019," Mr. Trudeau said, while acknowledging that the fiscal situation could evolve along the way. "All the way through, I will be open and transparent and tell the truth about our plans."

Interact with The Globe