O’Toole can exploit spendthrift Liberals

When Justin Trudeau proclaimed gleefully last week that he wouldn’t be raising taxes as part of his recovery strategy, he was likely aiming to take a bit of the wind out of the sails of the next Conservative leader.

But as Erin O’Toole moves to turn his leadership-race platform into something his party could run on in the next election, there’s still a lot of space for him to carve out as a conservative alternative. He needs to fill in the blanks quickly though.

The Liberals have already started to define their approach to recovery.

The “build back better” refrain keeps coming up, and the throne speech and fiscal update next month will seek to turn that progressive rallying cry into an actual vision that combines environmentalism, job creation, help to deal with the pandemic and support for the most vulnerable.

There’s no Liberal talk of balanced budgets or fiscal discipline, though. Even when Trudeau unveiled Chrystia Freeland as his new finance minister last week, the pro forma promises to keep a lid on spending or keep the debt burden on a downward track were absent.

That’s not the case for O’Toole.

During the Conservative leadership race, he campaigned, albeit vaguely, on “fiscal prudence” — getting the budget gradually back to balance, smaller and more efficient government, cutting costs and boosting small business and natural resource extraction.

It’s a traditional, small-c conservative approach despite the unprecedented fiscal and economic upheaval. It hints at a stark contrast to the Liberal direction, which implies lots more spending beyond the $343billion deficit already projected even before recovery efforts have begun.

But before voters can decide whether they prefer a right-leaning or left-leaning approach to recovery from the pandemic, O’Toole has some work to do in fleshing out what his campaign promises will look like in real life.

Most of his detailed campaign promises around recovery are somewhat dated. He wants government to invest in safe workplaces through ensuring proper supplies of masks, personal protective equipment and testing, which is already an ongoing effort by the federal government.

He wants to end the Canada Emergency Response Benefit and reform Employment Insurance to provide proper support for selfemployed, which the federal Liberals announced last week.

Longer term, he wants to “unleash the private sector” and spur higher rates of economic growth, not just by cutting taxes but by simplifying and flattening the tax system.

It means the rich would not face disproportionately higher tax burdens than the rest of us, and it’s something conservatives flirt with now and again.

But details are scarce, and the ideas themselves are highly controversial. Lower taxes don’t always lead to more private-sector investment or jobs. A flatter tax system may not be popular in the age of populism and anti-elite sentiment.

And how much cutting of government programs would be necessary if O’Toole really wanted to balance the budget at the same time? The deficit at this point is so enormous that we shouldn’t expect a hard date on its elimination, even from Conservatives.

Instead, a schedule or some kind of guiding principle could go a long way toward persuading those “blue Liberals” who are queasy about unconstrained deficits that they should give O’Toole a second look.

The Conservatives need to win that group over — something Andrew Scheer was not able to do — if they are to have a hope of winning the next election.

O’Toole “has got an opportunity here,” says Garry Keller, vice-president of StrategyCorp and chief of staff to Rona Ambrose when she was interim leader of the party. If he’s bold, “he can try to force the debate onto his terms.”

“Build back better” may sound enticing to professionals, but it won’t mean much to millions of blue-collar workers who are facing unemployment and looking for a way back to work right now, Keller said. And it will make those fiscal hawks within the Liberal Party cringe at the prospect of ballooning deficits.

Since the ousting of Bill Morneau last week, a narrative within both Conservative and Liberal circles has taken hold: The former finance minister’s departure was Trudeau getting rid of an obstacle to spending more. Whether that’s true doesn’t matter much.

The Trudeau-Freeland team seem perfectly content with that narrative; they have set themselves up to be doves, not hawks, on fiscal policy.

Wherever one stands on the economics, such positioning comes with political risk.

That’s why Trudeau tried to protect his right flank by promising not to raise taxes. But O’Toole still has ample room to manoeuvre and strike.

Heather Scoffield is a national affairs columnist with the Toronto Star.

Twitter: @hscoffield