Where’s the money coming from?
The Liberals are waiting with bated, if slightly malodorous, breath to pounce on the Conservatives and NDP when they release their platform costings in the next few days.
The Conservatives will say they will balance the books within five years, leaving themselves open to apocalyptic comparisons with Doug Ford's Ontario government and Sauron.
The NDP will commit to spending the equivalent of a mission to Mars on “headto-toe healthcare,” inviting criticism that they will turn this land of plenty into Venezuela.
My suggestion is that voters treat all party platforms like the works of fiction they are.
One senior Liberal recounted after the 2015 campaign, when the Trudeau transition team was being given its first briefing by Department of Finance officials, that he was stunned to discover the books were $12 billion worse off than had been anticipated in the spring budget.
“My distinct recollection was, ‘We weren't even close.' We would tease (platform architect, Mike) Mcnair and say, ‘Your costings were s--t'. But growth was not what was projected in the Conservative spring budget and oil was down,” the Liberal insider told me for my book on Justin Trudeau.
Bruce Carson, who worked in Stephen Harper's office, tells a similar story from his time in power. In his daily online newsletter, he recalled being the person designated to meet the Clerk of the Privy Council and the deputy ministers of finance and the Treasury Board after the 2006 election.
“It was during this meeting I learned that the campaign promise to reduce spending across the board, except Indian Affairs and Defence, may have been laudable … but its implementation would take some time. It seems that in order to reduce spending, one must stop it from rising and then level out spending before one tackles its reduction.”
The lessons to be taken from these two episodes is that none of the parties can be trusted when it comes to projecting revenues or spending.
Their costings are usually based on a faulty premise — baseline economic conditions that have long passed into the rear-view mirror.
They also operate in a bubble of optimistic self-delusion, anticipating the very best outcomes possible in order to spend, spend, spend.
Some improvements have been made in this election. All the parties are working from a baseline fiscal projection handed down by the Parliamentary Budget Office on June 20, which is better than a budget that was presented on March 19.
But the PBO would be the first to admit that the world has moved on since June.
The leaders seem to believe that Canada is hermetically sealed from events happening beyond its borders. But if they were to take note of recent comments by the Federal Reserve or the OECD or the European Central Bank or the People's Bank of China, they might put the brakes on some of their spending plans.
An OECD report at the end of September suggested we are about to see the weakest global growth in a decade. The French finance minister said Wednesday the trade war between the U.S. and China could cut growth by half a per cent next year. Canada performed well in the second quarter of this year but that strength came from trade, which is clearly vulnerable to a slowdown.
We don't yet know the financial impact of the mix of new taxes, cuts and spending measures proposed by the NDP and Conservatives. Andrew Scheer will doubtless suggest cuts to program expenses will be relatively painless, gained through “efficiencies” and “cutting red tape”. But, as Carson noted, reducing the scope of government is easier said than done.
We do know the Liberals intend to spend an additional $56 billion over the next four years, adding $94 billion to the national debt.
Their one fiscal anchor is the federal debt-to-gdp ratio that they suggest will dip marginally over the course of their mandate. Yet their revenue numbers are based on an oil price higher than the current one and growth projections stronger than those anticipated in more recent forecasts.
Voters should be outraged that we have four parties whose campaign promises are divorced from fiscal reality.
Where do the people who aspire to govern this country think the money is going to come from?
NONE OF THE PARTIES CAN BE TRUSTED WHEN IT COMES TO PROJECTING
REVENUES OR SPENDING. THEIR COSTINGS ARE USUALLY BASED ON
A FAULTY PREMISE — BASELINE ECONOMIC CONDITIONS THAT HAVE
LONG PASSED INTO THE REAR-VIEW MIRROR.