Last month’s election revealed a Conservative Party with more conceptual flaws than New Coke.
As we detailed in three previous editorials, it has a popularity defect, because beyond its rock-solid base, few other Canadians are willing to consider giving it their support. It has a demographic deficiency, in that it risks becoming the party of a rural, shrinking Canada, not the growing and increasingly diverse urban and suburban parts of the country. And it has an environmental flaw, in that its climate-change plan is more denial than action.
And then there’s the Conservative budget arithmetic.
One of Tory Leader Andrew Scheer’s most repeated election messages was that, under Prime Minister Justin Trudeau, deficits are out of control, the national debt is skyrocketing and the country’s fiscal future is imperiled. Paired with that was the implication that Ottawa has to get smaller.
The question of the right size of government, and how much it should or should not do, is a matter of opinion. Reasonable people can disagree. Questions about Canada’s deficits and debts, however, including their size and whether they’re rising or falling, are quantifiable. It’s just math. And the Conservative math on federal deficits and debt simply doesn’t add up.
Over the past four years, Ottawa’s deficits were small enough that the federal level of indebtedness, already low compared with Canada’s peers, fell further. And the Liberal platform promises four more years of deficits small enough to keep the level of debt on a downward slope. Ottawa’s fiscal house was in good shape in 2015. It’s in slightly better shape in 2019. And if the Liberals are true to their plans, it will be in slightly better health in 2023.
The Liberals have practised fiscal prudence, defined as a deficit that is small enough – 1 per cent of gross domestic product or less – for Ottawa’s relative debt, measured by the debt-to-GDP ratio, to decline or remain stable. It’s an approach most economists are comfortable with.
The Conservative touchstone of fiscal probity, in contrast, is a balanced budget. A government spending no more than it takes in, and never borrowing against the future, feels right to a lot of voters. But in a time of extremely low interest rates, the benefits of this much harder version of fiscal prudence are few and the costs are high. To close the budget gap – a budget gap that is small enough to not need closing – government either has to raise taxes or, since it’s the Conservatives we’re talking about, cut spending.
In Election 2019, both Liberals and Conservatives put forward plans that would lower Ottawa’s debt level. And both promised lower taxes. But the Liberals also put forward significant new program spending, while the Conservatives had to pencil in significant spending cuts.
Conservatives understandably tried to avoid talking about those cuts. Liberals, understandably, couldn’t stop talking about them.
That’s why, when Mr. Scheer released his platform’s costing details, he did so on the Friday afternoon of the Thanksgiving long weekend. He hoped any discussion of the cuts would make like Doug Ford and go away until after the vote.
The Conservative platform may have gone slow on achieving a balanced budget, not reaching it until five years out, but the difference between the Liberal and Conservative definitions of fiscal prudence is worth tens of billions of dollars over the lifetime of a government. Liberal budgets will have those billions. Conservative shadow budgets don’t.
For example, the Liberal platform has a $21-billion deficit in 2023-24, while the Conservatives promised a $4.8-billion deficit. The difference is the Conservatives offering a government roughly $16-billion smaller than the Liberals.
A lot of Canadians are open to the idea of smaller government in the abstract. But its fact, unless introduced thoughtfully and delicately, tends to be somewhat less popular. (See: Ford, Doug.) That’s because, although government always contains some inefficiency, waste and corruption, what it mostly does is fund programs, such as health care, or transfer money to people, from Old Age Security to the Canada Child Benefit.
The Conservatives motivated their base with a constant refrain about out-of-control deficits. But as a result, they ended up having no choice but to promise major spending cuts – giving credence to Liberal attacks and disqualifying themselves with too many voters.