Eye-popping expenses from the pandemic have affected people’s perspectives on federal deficits, and party strategies are shifting away from balancing budgets as a result, economists and experts say.
The “laissez-faire” approach by the parties is evident with even the Conservative party proposing a 10-year-plan to balance the budget, which relies on high GDP growth to offset its lack of any cuts, said Rebekah Young, director of fiscal and provincial economics at Scotiabank.
“What we’re seeing right now is deficits are not a key differentiator between parties and it’s not a driving issue,” said Young, who said parties would generally take much different approaches to spending or cutting.
“Right now there’s not a lot of emphasis put on the need to balance the budget or consolidate debt, at least in the near term. It’s certainly not up there in terms of pressing issues on the minds of voters.”
Armine Yalnizyan, an economist and Atkinson fellow on the future of workers, said there could be a paradigm shift that is fuelled by both an aging population and a population that has depended on the government to help them make it through the financial devastation of the pandemic.
Both those groups would look more kindly on governments spending more to support citizens, she said.
“This is the first time we are looking at a Conservative party, at least in the last 30-odd years, that is saying it will not cut its way to balance,” said Yalnizyan.
“Everybody seems to be focusing on what governments can do to be able to grow the economy to wrestle the debt-to-GDP ratio to the ground.”
That’s part of why experts say the Liberals have come out with a platform that doesn’t give an indication of when the government would balance its budget.
Rather, the Liberals and NDP have said that investments into economic and social programs can spur the economy and generate revenue to chip away at the deficit, which ballooned to $354-billion last year amid pandemic spending.
While the Liberal plan doesn’t have a target for a balanced budget, Yalnizyan finds the Conservative reliance on roughly three per cent GDP growth each year a troubling strategy. She notes it is a target only reached once since 2011.
The Liberal plan only needs roughly half that level of GDP growth to be successful, alongside its proposed revenues from investments into the economy, she said.
However, she’s also troubled by the amount of dollars being promised by all parties without clear indications of what it’ll buy for the country.
She said promises about employment insurance reforms are one area where the Liberals haven’t articulated what will change, or how much it would cost.
The New Democrats spent less time talking about how they’ll manage the deficit, offering a line in their platform on how they’ll “manage debt and deficits responsibly and (move) towards balance in the future when it’s prudent to do so.”
The party has said taxes on the “ultrarich” – those who have wealth over $20 million – and crackdowns on offshore tax havens are some of the ways they’d raise revenues.
University of Calgary professor Trevor Tombe said experts are still waiting on costing to be released for many of the promises being made by each party.
Tombe and other experts say it’ll be difficult to judge each fiscal plan until then. The full costing for the Liberal plan has been released by the parliamentary budget officer, but not for the NDP and Conservative platforms.
“I assume the PBO will release more, but parties can choose not to grant them approval to release costing,” said Tombe.
“In the last election, they released tons of costing and it was fabulous – this year I’m not sure if the parties’ strategies have changed, but I sure hope not.”
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