Skip to main content

Politics Mulcair’s no-deficit plan has met some resistance in NDP ranks

Thomas Mulcair often accuses the Conservatives of putting too much focus on the energy sector, to the detriment of other sectors, such as manufacturing.

Adrian Wyld/The Canadian Press

If you want to rankle key members of Thomas Mulcair's political team, try suggesting that the policies of the NDP Leader are more centrist than those being proposed by the Liberals.

They will respond by pointing to the promises of $15-a-day child care, major investments in health care, tax increases on big corporations – all initiatives associated with parties of the left.

But it is Liberal Leader Justin Trudeau, and not Mr. Mulcair, who says he will remain unfettered by the constraints of a balanced budget. And it is Mr. Mulcair who finds himself explaining his decision to forgo spending until it can be done without borrowing.

Story continues below advertisement

"We've said that we don't need the type of short-term thinking being proposed by the Liberals, where they are going to dump a massive debt on the backs of future generations," Mr. Mulcair tells reporters on the campaign trail.

The NDP will explain on Wednesday how it plans to meet its pledge of no deficits and still accomplish the big-ticket items spelled out in its platform. The costing exercise will show that the party intends to pay for its most expensive promises in a gradual fashion – implementing programs over a number of years with the greatest financial burden postponed until well into the future.

"It's a question of sound administration, long-term planning," explains Mr. Mulcair.

Nik Nanos, the president of Nanos Research, says the costing will be a key moment for Mr. Mulcair, who will need to persuade Canadian voters that his numbers stand up. "If it passes the smell test, it can be a political home run for him," said Mr. Nanos. "If it does not, it will be a significant setback, much more than a debate performance."

The New Democrats say their socialist roots prompt media pundits to search for reasons to paint them as irresponsible tax-and-spenders, and the promise of a balanced budget could ease the anxiety of centrist voters who are inclined to share that view.

But the commitment has met some resistance within the ranks of Mr. Mulcair's own party. And there are New Democrats who want spending on key measures to take place sooner rather than later.

On Wednesday, a group of some of the NDP's most high-profile supporters, led by best-selling author Naomi Klein and her husband Avi Lewis, issued a manifesto calling for a radical restructuring of the country's economy. It says austerity "[which] has systematically attacked low-carbon sectors like education and health care, while starving public transit and forcing reckless energy privatizations – is a fossilized form of thinking that has become a threat to life on Earth."

Story continues below advertisement

Meanwhile, economists say the decision to not run deficits is more about political messaging than sound financial practice.

Douglas Porter, chief economist at BMO Financial Group, said balanced budgets are a worthy goal, and large deficits over a sustained period of time can eventually have an impact on the government's ability to react to problems.

But "a few billion dollars in the green, or a few billion dollars in the red, in any given year, it's not going to make a significant amount of difference," said Mr. Porter. "An economy can probably sustain modest deficits."

Rhys Kesselman, who holds the Canada Research Chair in public finance at Simon Fraser University, says balancing the budget is an exaggerated goal and "almost a mania or a fetish" of politicians.

Some economists, said Dr. Kesselman, argue that the aim should be a sustainable budget, rather than a balanced budget, in which public debt does not grow faster than the economy. With a national debt hovering at more than $600-billion, and a nominal GDP of 4 per cent, he said Canada could theoretically handle a deficit of about $24-billion a year – though he personally argues it should not be that high.

And, as for the notion that deficits burden future generations, Dr. Kesselman said money spent on ports, highways, higher education and health care is an investment in the real capital of the country. If the spending is sensible, he said, "we're not burdening future generations, we're giving them a leg up."

Story continues below advertisement

Angella MacEwen, a senior economist with the Canadian Labour Congress, said "I think all of this discussion around whether the budget is balanced is sort of besides the point. What is really important is, are you making the kinds of investments that we need?"

Still, she understands the NDP's interest in promising there will be no deficit.

"You can borrow and make the types of investments to grow the economy and it won't hurt your debt-to-GDP ratio," Ms. MacEwen said, "but if you can do it without borrowing, and if you can put that sustainable funding in place so that you know where the revenue is going to be coming from for the long term to pay for that, that's definitely better."

At the top of the NDP's economic team is Leader Thomas Mulcair, himself the party's former finance critic, who has overseen a transition to more centrist policies. He has driven an internal shift to make the party's policies more pro-trade and small-business friendly.

In this election campaign, a new face for the federal party, former Saskatchewan finance minister Andrew Thomson, has suddenly jumped to the fore.

Mr. Thomson is running against Joe Oliver, who serves as Finance Minister in the Conservative government, in Toronto's Eglinton-Lawrence riding, offering a claim of cabinet experience and putting a fiscal-conservative face on the party. In Saskatchewan, his budgets in 2006 and 2007 cut corporate taxes and paid down debt, and as a federal candidate, he criticizes the Liberals for being willing to run deficits to allow stimulus spending. But he's also a long shot to get elected.

Story continues below advertisement

That's a change of tone from some of the other members of the party's economic team. Industry critic Peggy Nash, a former CAW labour negotiator who was Mr. Mulcair's first finance critic, criticized the Conservatives for too much austerity as they sought to balance the budget.

Mr. Mulcair clearly set out to change the party's image, and policies, with a decidedly moderate team. He tasked Vancouver MP Don Davies, 52, with formulating a new trade policy that would see New Democrats support some free-trade deals.

Last year, he made Northern B.C. MP Nathan Cullen, 43, one of the NDP's most adept front-bench performers, the new finance critic. Mr. Cullen was a proponent of NDP-Liberal co-operation in his surprisingly strong third-place NDP leadership bid in 2012. This year he's been the point man for a revamped economic policy that pledges balanced budgets, no personal tax hikes and modest tax incentives for small business and manufacturers – a more business-friendly side for the party to offset plans to increase corporate taxes.

--------------------------------

Mulcair seeks to change party's image with moderate team

At the top of the NDP's economic team is Leader Thomas Mulcair, himself the party's former finance critic, who has overseen a transition to more centrist policies. He has driven an internal shift to make the party's policies more pro-trade and small-business friendly.

Story continues below advertisement

In this election campaign, a new face for the federal party, former Saskatchewan finance minister Andrew Thomson, has suddenly jumped to the fore.

Mr. Thomson is running against Joe Oliver, who serves as Finance Minister in the Conservative government, in Toronto's Eglinton-Lawrence riding, offering a claim of cabinet experience and putting a fiscal-conservative face on the party. In Saskatchewan, his budgets in 2006 and 2007 cut corporate taxes and paid down debt, and as a federal candidate, he criticizes the Liberals for being willing to run deficits to allow stimulus spending. But he's also a long shot to get elected.

That's a change of tone from some of the other members of the party's economic team. Industry critic Peggy Nash, a former CAW labour negotiator who was Mr. Mulcair's first finance critic, criticized the Conservatives for too much austerity as they sought to balance the budget.

Mr. Mulcair clearly set out to change the party's image, and policies, with a decidedly moderate team. He tasked Vancouver MP Don Davies, 52, with formulating a new trade policy that would see New Democrats support some free-trade deals.

Last year, he made Northern B.C. MP Nathan Cullen, 43, one of the NDP's most adept front-bench performers, the new finance critic. Mr. Cullen was a proponent of NDP-Liberal co-operation in his surprisingly strong third-place NDP leadership bid in 2012. This year he's been the point man for a revamped economic policy that pledges balanced budgets, no personal tax hikes and modest tax incentives for small business and manufacturers – a more business-friendly side for the party to offset plans to increase corporate taxes.

--------------------------------

Story continues below advertisement

How the NDP plans to address key campaign issues

Taxation

The NDP says it won't touch personal income taxes and will cut the small-business tax rate to 9 per cent within two years. They would raise the corporate tax rate, but the precise rate hasn't been announced. That detail is expected to be included when the party releases a full cost breakdown of its promises ahead of Thursday's Globe and Mail debate on the economy.

The NDP would maintain income splitting for seniors, but cancel it for families with children under 18. They would also cancel the recent near-doubling of the maximum annual contribution to Tax-Free Savings Accounts.

Infrastructure

The party is promising to increase transfers to municipalities and boost transit funding without going into deficit. The federal gas-tax transfer would be gradually increased over the existing annual level of $2.1-billion. In the fourth year of an NDP government, the transfer would be worth $3.7-billion. The NDP would also spend slightly more on transit than the Conservatives over the next two years, rising to $1.3-billion a year by the fourth year. In addition, the party is promising a one-time $500-million incentive for new affordable housing and annual funding for existing affordable housing programs that would grow to $650-million a year.

Energy

Leader Thomas Mulcair often accuses the Conservatives of putting too much focus on the energy sector, to the detriment of other sectors, such as manufacturing. Mr. Mulcair says he will bring in stronger environmental regulations and those rules will determine whether an NDP government approves projects such as the Energy East pipeline.

Manufacturing

Mr. Mulcair says he will be a personal champion of Canada's manufacturing sector. He says this means he will personally attend international trade shows to encourage multinational companies to increase their manufacturing presence in Canada. He has also promised an innovation tax credit for manufacturers at a cost of $40-million per year.

Bottom line

The NDP promises to balance the books during its first full fiscal year in power, which would be 2016-17. The party says ending tax breaks for people who are compensated with stock options are among the measures that will bring in the additional revenue required to cover the cost of the NDP's spending promises.

Editor's Note: Incorrect information appeared in an article about the NDP economic plan that appeared in Wednesday's paper. The federal debt is in excess of $600 billion.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter