House Debate - The "D" Word: Deficit
It's time for this week's House debate! The Duffy drama subsided this week and attention turned to the "d" word — deficits.
Liberal leader Justin Trudeau made waves when he announced an infrastructure plan that would increase spending on public transit, social housing and green technology projects. But the real headline might have been this: the Liberals would also run at least three more deficits. Is it responsible (or good politics?) to say you won't balance the books?
We asked Ontario Conservative candidate Erin O'Toole, Nova Scotia New Democrat candidate Megan Leslie, and Ontario Liberal candidate Chrystia Freeland.
Here's the debate:
Chris Hall: How big a gamble is this do you think?
Chrystia Freeland: Well, I don't think it's a gamble at all. Because what we have done is smart policy, which all the serious economists in Canada and around the world are recommending. What we've done is recognize the fact that Canada is in recession.
We've recognized that we have a budget deficit today and that the pragmatic — the smart thing to do — is to invest for growth, to invest $60 billion over the next 10 years. And I want to be really clear, you describe this as a gamble, Chris, this is what the IMF is recommending. It's what David Dodge, the former governor of the Bank of Canada, is recommending.
Investing for growth in the low interest rate conditions of 2015 is the smart, pragmatic thing to do. And I'm really proud that the Liberal Party has had the courage of its convictions to make this bold move.
Chris Hall: Megan Leslie what do you think?
Megan Leslie: Stop me if you think we've heard this one before. We've already seen this from the Liberals. Look, in 1993, the Liberals campaigned on jobs, jobs, jobs and it was all going to be about infrastructure and jobs, jobs, jobs — and then, in 1995, they introduced an austerity budget. And it was austerity, after austerity, after austerity. They destroyed the Canada Assistance Plan and housing and social programmes. So we`ve seen this bait and switch before.
What we really need to do is fix the structural problems with our economy and provide long-term, stable, predictable funding when it comes to infrastructure and that's what the NDP is promising.
We've had great accolades for the fact that municipalities will be able to invest strategically. They'll be able to plan and think about the long-term and be innovative because they know what's coming in the future thanks to the kind of plans we've put together.
Chris Hall: Let me just get Erin O`Toole`s version.
Erin O'Toole: Well, listen, Chrystia is famous for her line "Amen to raising taxes" now she`s adding to that "Amen to running long-term prolonged deficits" for Canada.
She's using information that's just wrong. On Friday, Finance Canada confirmed that Canada is in a surplus position in the last quarter. There's been a $5 billion surplus. Remember, we delayed the budget because we knew resource prices were becoming depressed and we needed to take that into the budget.
So, we're exactly on track and Canada`s performance in the last few years — under Prime Minister Harper — has led the G7 in job creation, GDP growth, we`ve done that while on a plan to balance the budget, as we did, and to not raise taxes.
Justin first said "budgets will balance themselves," now he's just given up — thrown up his arms — and said I'll never balance the budget and I'll raise taxes on job creators and on families.
Chris Hall: In fairness I don`t think he said permanent, I think he said three years worth of deficits.
E.O'T.: Well that`s kind of the same approach that McGuinty and Wynne Liberals in Ontario used. Now they have a $10 billion structural deficit. The same people advising Justin Trudeau, Chris, advised the McGuinty-Wynne Liberals on this and we are now facing, in Ontario, a structural deficit, rising costs for borrowing because the credit rating has been downgraded.
We don`t need this same approach to Canada`s finances.
We need to stay the course on the economic approach that has led the G7, that's in Prime Minister Harper, and our approach on not raising taxes on Canadians, promoting job creation and making through we keep the balanced budget while investing in key areas like health and infrastructure, like we`re doing.
C.F.: Can I just jump in —
One of the myths of the Harper Conservatives — that is essential to debunk — is this idea that somehow they've been sound and prudent economic managers. Erin has just assured us that we are running a budget surplus this year and that is simply not true.
In the first half of the year — through a little bit of financial chicanery — using the EI funds, using the one-off sale of General Motors shares, the numbers looked good. But government economists, Bank of Canada, the ministry of finance, is showing that for this overall year we will be running a budget deficit. And you pointed out, Erin, that you were late with your budget projections because of the price of oil, but even though you were late, you're still overly optimistic on the price of oil, so it's going to look even worse.
E.O'T.: We built a contingency into the budget and what Finance Canada just confirmed yesterday, Chrystia, is that our forecasts are sound. In our first quarter we`re five billion dollars in surplus.
I know the Liberal Party wants a deficit so they can run more of them but that's not our approach because deficits are deferred tax raises.
Chris Hall: A lot of people who observed the announcement his week that with Tom Mulcair promising to balance the books — the Liberals are now more left-wing than the NDP. What do you make of that?
M.L.: (Laughs) What I would say is making budgets is really about choices. If you are going to have income-splitting for the richest Canadians -
K.F.: Which the Liberals are opposed to —
M.L.: Not everybody can access that kind of program. Instead, how about investing that money in child care for all parents no matter what their income is? Instead of having CEOs not paying taxes on stock options, why don`t we then give a small business tax cut because small businesses create 80% of the jobs out there? It is about making choices. For us to keep our commitments — we don`t need to go into deficit.
E.O'T.: Clearly it is about choices. And you heard Megan and Chrystia just confirm that they would eliminate income splitting for seniors and families.
M.L.: That`s not true — not for seniors.
K.F.: Yeah, Erin, it`s not true. Not for seniors.
E.O'T.: Families raising children and seniors on fixed income, those are the groups that we`ve offered limited but impactful (sic) tax relief for.
K.F.: Look, I just wanted to answer your question, Chris, about who is putting forward the most progressive program. The reality is the NDP has not had the courage to say: "Now is the time we need to invest" for growth and they are really presenting Canadians with a real mirage. On the one hand, they can do all these huge programs, and on the other hand they're going to balance the budget.
The reality — with the NDP program — either they are not going to deliver on this mirage they are promising of they are going to have to cut in a really massive way in other parts of the budget. The NDP owes it to Canadians to come clean.
We've been open — now is the time to invest for growth, we're willing to run deficits for three years. I would like to hear that sort of transparency from the NDP.
Chris Hall: Alright, well, here's your chance:
M.L.: I'll give credit to the Liberals. They know how to do flashy politics. The thing is they're going to say, "Look we`ve got all this money for infrastructure," but what about three years from now?
That's when they'll start doing the cuts. If you're going to have sensible policy, and think about Canada's long-term future, municipalities, we need to know as Canadians: do we have the money next year? The year after that? Can we make plans, can we invest strategically and that's what our innovation tax credit is all about. That's what the NDP's better transit plan is all about.
And we have been lauded for the fact that this will take Canada in a new direction. The fact that there is stable, predictable funding that is not based on an election cycle.
Chris Hall: How important do you think this issue of infrastructure and deficit is to the voting choices that Canadians will make in October?
E.O'T.: I think we're hearing here is a dispute between the Liberals and the NDP on how big deficits are going to be or whether they're going to acknowledge deficits. In the last number of years we ran a government that's been investing in infrastructure.
The Building Canada Plan has a $75 billion commitment over 10 years, we've been investing in larger increases for health care transfers and to the provinces for key areas. But we've balanced the budget and tried to lower taxes for key groups of Canadians who've seen prices rise. Fixed income, families raising children, we've offered tax relief, the other parties, by running deficits — that is just delaying tax increases.
Chris Hall: My question is - how important do you think this is for voters?
E.O'T.: I think people in their kitchen realize they have to balance their own books. Businesses have to balance their own books. They can't grow jobs from the 'heart' outwards as Justin promises. These are real decisions that require leadership and this is where Prime Minister Harper has been strong. We need to stay on a course that is about keeping the budget balanced, offering tax relief to groups of Canadians require it and spending in priority areas. That's what we will continue to do.
C.F.: Well, look, the Conservatives can keep on repeating that they are terrific economic managers but that is called grading your own homework and the facts speak — absolutely — otherwise. This is the government with the worst economic record since R.B. Bennett.
We are the only G7 country that is in recession. Those are the facts and I think the economy is the number one issue for Canadian voters.
What I am really proud of with this announcement this week is Canadian voters now have a really clear choice. The Liberal Party is standing for investing in growth, it is the party that is speaking honestly with Canadians, and saying we are in recession, we are in deficit, we have a clear plan, which recognizes that we are in a rock bottom interest rate environment and that we need investment for long-term growth.
The Conservatives are offering more of the same — cut, cut, cut — and the NDP don't know where they are.
M.L.: I think when we're talking to voters — the budget, deficits — they are important but it's very much in the context of the economy as a whole. People do want to know what is going on - will you have a balanced budget? They do want to see costed platforms, which we're not seeing from the Liberal Party, they do want to know how we're going to deal with this constant deficit that the Conservatives have had us in for years. So that's part of it.
They also want to know how are you going to create jobs. So when you look at something like the NDP's platform on child care - for every $1 you invest in child care - it also puts $1.70 into the economy. It's programs like that will actually help us grow the economy while making it easier for Canadians to make ends meet.