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After redefining the limits of government spending during the COVID-19 pandemic, Justin Trudeau’s Liberals no longer make any pretense of caring about the deficit.

They had pretty much got to this point during the 2019 election campaign, before anyone in Ottawa had contemplated a global pandemic blowing up the budget. Unlike their first campaign in 2015, when the Trudeau Liberals promised to run “modest” $10-billion-a-year deficits before balancing the budget by the end of their first mandate, their 2019 platform provided no inkling of when, if ever, they planned to put an end to deficit spending.

The pandemic freed the Liberals from having to pay so much as lip service to what was left of the fiscal responsibility their party once championed under former prime ministers Jean Chrétien and Paul Martin. Now, they use any excuse to spend more.

Take the Liberal election platform released this week, the one Mr. Trudeau managed, with a straight face, to describe as “responsible” and “prudent.” It seizes on an Aug. 16 Parliamentary Budget Office report that projected lower deficits over the next five years than those outlined in the April federal budget – thanks to higher economic growth – to promise additional spending. No matter that the PBO warned that its baseline projections are highly uncertain, and that Statistics Canada this week reported that the economy actually shrank in the second quarter.

And so, instead of a cumulative deficit that the PBO projected would be $66-billion lower by 2025, we will get one that is even bigger than what the Liberals projected in the April budget thanks to the $78-billion in new spending promised in the platform.

Meanwhile, of all the proposed new revenue-raising measures outlined in the platform, the one the Liberals are counting on to bring in the most money (mandating the Canada Revenue Agency to “combat aggressive tax planning and tax avoidance”) is the least bankable. The Liberals project this promise would increase net tax revenues by $12-billion over four years starting in 2022. The PBO counters there “are several sources of uncertainty regarding this estimate.”

The Liberals deserve some credit for at least attempting to look transparent by providing a costing framework for their promises, however questionable. Neither the Conservatives nor the New Democratic Party have so far bothered to do as much, an omission that is less egregious on the part of the NDP (which thinks deficits don’t matter) than from the Tories (who claim to stand for fiscal responsibility).

The only NDP promise that the PBO has so far costed – at $38.5-billion over four years – is the party’s plan to introduce a universal pharmacare program. But the estimate comes with big caveats, such as the “assumed growth rates of various cost drivers” and “the assumed confidential rebate rate” drug companies offer Ottawa.

The Conservative platform asks Canadian voters to suspend disbelief long enough to buy the party’s promise that it can balance the budget (during a third Tory mandate, mind you) by “getting back to robust economic growth of 3 per cent or more per year.” Such a feat has not been achieved, on a consistent basis, since before Tory Leader Erin O’Toole was born. And the prospect of a return to those days are remote, given Canada’s aging demographics and stubbornly low productivity growth.

No matter which party wins the Sept. 20 election, it is likely to face strong economic headwinds before long. The competitiveness challenges Canada’s economy faced before the pandemic have not disappeared, and they risk becoming more acute as the federal and provincial governments grapple with much higher debt levels.

The Liberals have based their fiscal plan on the assumption that the federal debt, on track to surpass $1.4-trillion by 2025, is sustainable thanks to low borrowing costs. They assume low rates are here to stay and project the federal net debt will fall to 46.5 per cent of gross domestic product by mid-decade, from 50 per cent this year.

This is a risky assumption on which to hang your hat. A July C.D. Howe Institute report showed that it would take only “modest” increases in interest rates and somewhat slower growth rates to thrust Canada into a fiscal crisis like the one it experienced in the mid-1990s. While no such crisis appears imminent, as financial markets continue to scale record heights on expectations of a post-pandemic boom, no government should be betting that the current euphoria will last.

This is not fear-mongering; it is basic math. With provincial balance sheets (hello Ontario) in much worse shape than they were in the 1990s, the country is on an even riskier trajectory than it was back then.

None of the parties want to talk about that. After the election, they may be forced to.

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