National Post (National Edition)
Conservatives' budget ideas are least bad
Everybody already knows what the Trudeau government is going to do in Budget 2021 — they'll keep the spending taps on, full blast. But what do the Conservatives and NDP think? For that we can turn to the Report of the Standing Committee on Finance, which contains a dissenting report from the Conservatives and a supplementary report from the NDP.
The NDP supplement is predictable. On top of the massive spending the Liberals already plan, the NDP calls for higher taxes on the “ultra-rich” to pay for: universal child care, universal public pharmacare, increased health care transfers to provinces, increased funding for and national regulation of long-term care centres, increased spending on services in Indigenous communities, a more expensive social safety net, and an unidentified “multitude of programs that will necessarily improve the lives of Canadians and help our businesses flourish and grow.”
Nowhere do they provide evidence to back up their statement that more government programs will necessarily improve the lives of Canadians and help businesses flourish — probably because there is none. The NDP report also underlines the importance of a “bold new vision” involving a “transition to an economy based on clean and renewable energy” and concludes by informing everyone that the finance committee's work was done on the unceded territory of the Algonquin, Haudenosaunee and Anishinabek Nations.
Moving on to the Conservative report, it is more of a mixed bag. It is not entirely conservative, but the Tories at least demonstrate, unlike the Liberals and NDP, some understanding of basic economic reality. “Now is no time for risky experiments or fantastical utopias,” the Conservative report begins. Cheques from Ottawa, funded by borrowing, cannot sustain people's standards of living. Rather, at bottom, in order to consume goods and services, there has to be economic production. Thus, “we need real industries paying real wages by making real things for real customers in the real world.”
There are — Heinz ketchup-style — 57 recommendations in the Conservative report. The section on spending is unambitious: a 10-year timeline to balance the budget is far too long. The recommendations to introduce no new permanent spending programs and not to increase real per capita government spending are fine, but what is really needed is a widespread reduction of program spending. Entire government agencies, departments, and programs, and large numbers of public-sector jobs ought to be on the chopping block, but when it comes to specific recommendations, the Conservatives reach only for the lowest hanging fruit: “Eliminate targeted corporate welfare programs.” That presumably means leaving untargeted corporate welfare programs and other wasteful federal programs largely intact.
The Conservatives' section on natural resources contains some good ideas, including repealing both Bill C-69, which increased the regulatory burden on major construction projects, and Bill C-48, which banned oil tankers from a section of British Columbia's coast. Eliminating the Liberals' carbon tax and the Clean Fuel Standard are also solid ideas; unfortunately, Conservative leader Erin O'Toole's stated commitment to achieving the same net-zero emissions the government is aiming for creates the very strong possibility that the Conservatives will replace the economically harmful Liberal climate policies with equally, if not more harmful policies of their own.
The most encouraging sections of the Conservative report are on small businesses and taxation and regulation. The Conservatives sensibly propose to: reverse the 2021 Canada Pension Plan tax increase, repeal the annual alcohol tax increase, repeal the Liberal tax increase on passive income earned by small businesses, and not introduce any new taxes. On regulation, the Conservatives say the government should measure and reduce the costs of federal regulations on small businesses and implement a 2-for-1 rule in which regulators would be forced to repeal two regulatory requirements for any new one they introduce in the next five years. They also recommend “comprehensive regulatory and tax reform to spur productive investment.” The details are lacking, and the 2-for-1 rule is easily contravened as regulators can combine multiple small regulations into a large one. Nevertheless, at least the intention to meaningfully cut taxes and regulations appears to be there, which is a good sign.
Unlike the NDP report, the Conservatives' does not include a land acknowledgment, so we do not know on whose territory, ceded or un-ceded, it might have been prepared. Whatever the case, the Conservatives' ideas for Budget 2021 are much better than those of the Liberals and NDP, whose talk of great resets and climate-based economic transformations should drive good economists — or indeed, any sensible person — to despair.