PM promises to ‘build back better’
But O’Toole scoffs, saying there is no plan to reduce pandemic debt
Prime Minister Justin Trudeau on Monday promised a fall economic update that includes “fiscal responsibility” but he was quickly pilloried by Conservative Leader Erin O’Toole for his government’s spending habits thus far.
On the heels of a heated political battle last week in Ottawa where MPs nearly triggered an election over a Conservative motion, both leaders delivered back-to-back speeches in front of the Canadian Chamber of Commerce, the country’s largest business association representing some 200,000 businesses.
During his speech in front of the virtual audience, Trudeau made a commitment to “build back better in a fiscally sustainable way” but didn’t specify a financial anchor — something that would harness government spending and address debt — when pressed about one during a question-and-answer session with the group’s president, Perrin Beatty.
“We’ll certainly talk about fiscal responsibility (in the fall economic update),” Trudeau told Beatty.
“But I think there’s a lot of uncertainty still around where we’re going to end at the end of this pandemic, and I think it would be premature to be locking things down.”
The government has an obligation to step in and spend during a crisis but the concern the business community has is whether they’re in store for a structural deficit and a swath of new spending, Beatty said during an interview with the Star.
“The issue for us is that we have $1.2 trillion of debt we’ve accumulated at the federal level,” said Beatty, a former MP who served as a Progressive Conservative cabinet minister in the 1980s and 90s.
“Any investor looking at Canada is going to ask a simple question and that is, ‘Do you have a strategy for bringing your finances back into order?’”
O’Toole, who spoke after Trudeau, criticized the Liberals for their response to the pandemic and for not having a financial anchor to guide their emergency spending and a path out of debt. For example, some have suggested keeping debt as it relates to GDP on a downward trend as one fiscal anchor for Ottawa, something the Liberals had planned to do before the pandemic struck in March.
O’Toole panned the government for its response to the first wave of the COVID-19 pandemic, saying Canada closed its borders late and flip-flopped on public health guidelines around masks. O’Toole then slammed the economic response for being “just as late and confused.”
“Rather than preserving jobs and maintaining as much economic potential as possible until the first wave of passed, the government set up the Canadian Economic Response Benefit, the CERB, and decided there would be no qualifying or verifiable criteria for receipt of the CERB benefit.”
The Conservatives had pushed for an expanded Employment Insurance program, said O’Toole, which would have bolstered support for self-employed and gig economy workers. The CERB has since been wound down and an expanded EI program, along with different emergency benefits, is now in place.
During a question-and-answer session with Beatty, O’Toole accused the Liberals of not having a plan to deal with government finances, saying that Finance Minister Chrystia Freeland’s “new fiscal anchor is low interest rates.”
“I thought that was scary,” he said.
A Conservative government would commit to emergency spending but in a “balanced” way which focuses on job creation, GDP growth, and not being ideological about specific industries, said O’Toole.
Since the summer, Trudeau’s government has faced questions about the massive amount of emergency spending, and a deficit projected to hit $328.5 billion.
“I’ve heard this concern from a lot of people about how much this pandemic is costing,” he told Beatty.
“We don’t feel it’s businesses, we don’t feel it’s ordinary Canadians (that should shoulder the costs). The federal government with the low cost of borrowing, with the advantages we have in terms of long-term low interest rates has, as well, the fiscal space, the fiscal capacity, to do this.”
He also said new legislation containing new rent and wage subsidy measures will be tabled before Parliament soon.
Trudeau pledged ongoing support for Canadians even while the minority government is seeing “a little more politics” coming from “our partners these days.”