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Why the Liberal's Fiscal Plan is the Most Sound

09/29/2015 08:01 EDT | Updated 09/29/2016 05:12 EDT
Lucas Oleniuk via Getty Images
TORONTO, ON - AUGUST 17: Liberal Party of Canada leader Justin Trudeau joined Premier Kathleen Wynne for an election rally in Toronto Centre Monday night. (Lucas Oleniuk/Toronto Star via Getty Images)

With almost all of our 2015 election commitments now in the public domain, the Liberal Party published on Saturday the fiscal plan that will guide the implementation of our platform over the next four years.

It has been well received, earning positive feedback from both UBC Economics professor Kevin Milligan, and former parliamentary budget officer Kevin Page, among others.

The Liberal fiscal plan is built around the critical choice we have made to invest immediately in stronger economic growth, more and better jobs, and greater fairness. We've made that choice because these are the important things that Canada most urgently requires after a dismal decade of Conservative economic failure.

By sharp contrast, both Stephen Harper and (strangely) Thomas Mulcair say the priority must be balancing the books -- now and every year going forward. That, they say, must trump everything else. They're wrong. A far more pressing concern is Canada's damaging lack of economic growth. That's the problem that needs fixing now.

Over the past decade, Mr. Harper has the worst growth record of any Prime Minister in 80 years. He has the worst job creation record since the Second World War. We've been limping along, stranded in grinding mediocrity-- in or on the cusp of recession -- for most of his time in power. His approach is clearly not working. It's sheer folly to stick with proven failure.

But that's what Mr. Harper advocates, and Mr. Mulcair has bought into the Conservative fiscal framework. Their approach has consequences:

  • Not enough jobs. There are 160,000 more jobless Canadians today than just before Mr. Harper took power.
  • Poor job quality -- the worst in 25 years.
  • Record high household debt. For every dollar of disposable income, the typical Canadian family is carrying1.65 in debt.
  • Families are worried about the high cost of post-secondary education and not being able the save enough for a decent retirement.
  • Empty-nester households are finding their adult children moving back home, because the economy is just not strong enough to let them get started on their own.
  • A majority of Canadians now believe this younger generation will not be able to do as well as their parents did before them. Our almost automatic expectation of progress -- of upward mobility from one generation to the next is fading.

These are the things that flow from a chronically weak economy. And they won't be fixed by further cuts and the artificial declaration of a balanced budget for political convenience in an election year. What's required is significant new federal investment in the drivers of real growth.

That's what Justin Trudeau has proposed -- doubling federal investments in public infrastructure over this next decade, and bolstering the spending power of the middle-class by cutting their taxes and by increasing federal support for the high cost of raising children.

Mr. Trudeau's timing for such investments is exactly correct. The needs are clear and pressing. Interest rates have never been lower. Canada's debt-ratio (i.e., the size of our federal debt vs. the size of our economy overall) has rarely been more favourable (31%), and it will continue to get better each and every year under our plan.

The current Governor of the Bank of Canada, Stephen Poloz, has called Canada's lack of economic growth "atrocious". He has chopped interest rates twice this year to try to stimulate some action. But he gets no cooperation from the Harper government. Just more program and service cuts.

Distinguished economic and public policy experts argue strenuously that the Harper Conservatives are wrong. These luminaries include former Bank of Canada Governor David Dodge, Stephen Harper's former Clerk of the Privy Council Kevin Lynch, former Finance Deputy Minister Scott Clark, Canada's former Chief Statistician Munir Sheikh, and former Parliamentary Budget Officer Kevin Page. They all advocate an approach similar to Mr. Trudeau's.

And the Liberal Fiscal Plan this past weekend lays out how it will be accomplished in a fiscally sound manner.

Trudeau's plan is REALISTIC -- because it's rooted in the most recent data from the Bank of Canada and the Parliamentary Budget Officer about Canada's current economic condition and future prospects. By contrast, both the Conservatives and the NDP have based their plans on false and outdated figures in the April budget.

Trudeau's plan is PRUDENT -- because it doesn't prematurely claim revenues for the government from the economic growth we expect our plan to generate. We'll count those chickens only after they have hatched.

Trudeau's plan is SUSTAINABLE -- because it will steadily reduce the nation's debt-ratio year-after-year, from 31 per cent today down to 27 per cent in 2019, at which time we will balance the books on a far more durable basis than that which exists today.

And Trudeau's plan is TRANSPARENT -- because he is completely candid about needing to run modest, affordable deficits for three years while the country invests urgently in growth, jobs and fairness. He's putting first things first.

Mr. Trudeau, his plan and his team are ready.

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