Trudeau borrowing Wynne’s playbook
Liberal Leader Justin Trudeau has pledged to spend $60 billion more than the Conservatives on transit and green projects over the next 10 years — and admitted a government he led would probably run a deficit to do it.
“We will have additional announcements in support of these vital investments over the course of this campaign,” the party’s campaign document says, so expect photo ops across the country offering specifics about things the Liberals would like to help pay for.
Trudeau might have more trouble with that than you’d think. But that’s a problem for later, once he and his party are in power.
Right away, Trudeau’s promise means he gets to trump Stephen Harper’s claim that the Conservatives have created the biggest and longest infrastructure program in Canadian history, which is both true and misleading. The Tories’ $53-billion “New Building Canada Fund” is so big precisely because it’s so long-lasting, promising less money each year than previous infrastructure programs but lasting more years. The Liberals would double the spending the Conservatives have promised.
This isn’t a stimulus program, Trudeau insisted in making the announcement in Oakville, Ont., on Thursday — it’s “smart investments” to “build a strong economy.”
Whatever you want to call it, the plan is straight out of Kathleen Wynne’s Ontario playbook. Trudeau, like Wynne, argues the stalled economy needs a boost from government spending and that long-term investments in things like new bridges and subway lines will pay dividends well beyond their immediate costs. She calls it “building Ontario up,” and is borrowing to do it.
Trudeau likewise. He expects to run a deficit of $10 billion in each of the next two years and some unspecified but smaller amount in 2018. The Conservatives and New Democrats promise balanced budgets despite the damage the oil crash has done to the federal treasury, so there are some points for honesty on the Liberals’ part here.
The Liberals’ additional $60 billion would focus on transit projects, “green infrastructure” such as water-treatment plants and upgrades to resist climatechange-induced damage like floods and fires, and “social infrastructure” such as new subsidized housing and daycare centres.
There’s a two-step built into the plan, however. The extra Liberal money would go to things urban leftish voters like, but in the written version the Liberals say it would free up the billions in the existing Conservative program for “roads, bridges, transportation corridors, ports, and border gateways,” which are typically more appealing to suburban and rural voters.
The plan sucks up to Canadian cities and towns that have been demanding richer federal infrastructure programs for years (they got closest to what they wanted when Paul Martin was prime minister and have been pretty unhappy the last nine years), but it implies some pretty heavy spending by those municipalities and cash-strapped provincial governments, too.
That’s how most infrastructure spending works: costs are split among three levels of government. Not everything’s done that way (not on things the federal government owns, for instance), but if Prime Minister Trudeau wants to spend $60 billion, expect our governments collectively to spend something closer to $180 billion.
Municipalities are always happy to take federal and provincial cheques, but drastically increasing their capital budgets would mean drastically increasing their own borrowing.
Ottawa already figures it’ll be borrowing up to the limit of what it’s comfortable with to finance its light-rail plans over the next couple of decades, having increased its debt markedly for stimulus projects, the Lansdowne redevelopment and the first phase of rail over the last few years. Harper has already promised billions for full slates of transit projects here and in Toronto and Calgary; Vancouver voters rejected a small tax hike that their local leaders thought was the best way to pay for more transit there.
The Ontario government has a big long-term infrastructure