CM – Conservatives would balance the budget with an economic run-up and « without cuts »: O’Toole

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A Conservative government will balance the budget « without cuts » within 10 years, said chairwoman Erin O’Toole on Tuesday, developing a plan that depends on a decade of accelerated economic growth.

Speaking at a campaign rally for the party’s broadcasting center in an Ottawa hotel, the Tory leader said Canada is effectively borrowing more than $ 400 million each day, resulting in a $ 354 billion deficit last year amid emergency spending due to the COVID-19 pandemic.

O’Toole said that if elected, he will introduce more stimulus spending but will end much of it after the first year and fully settle it over five years.

“We will help hard-hit sectors affected by the pandemic so that these jobs can be preserved. We will grow the economy so that we can rebalance responsibly and fairly without cuts, ”he told reporters.

The conservative platform says the robust economic recovery on which the Tory Plan is based expects GDP to grow by around three percent annually, a target that has only been met once since 2011.

Neither the liberal budget nor the NDP platform set a horizon for budget balancing, with both parties saying that investing in economic and social programs can boost the economy and generate revenue more effectively than reduced budgets.

Statistics Canada released figures early Tuesday showing that the country’s economy had its worst quarterly quarter since the pandemic began, shrinking 1.1 percent on an annualized basis between April and June and possibly continuing to decline in July.

« Under Justin Trudeau we are going further down the path of recession, not the path of recovery, » said O’Toole of the liberal leader.

O’Toole, whose platform is not calculated, also pointed to a report by the Organization for Economic Co-operation and Development showing that Canada is lagging behind the United States in its economic recovery.

The liberal budget in April revealed substantial spending on social programs and promised a return to small deficits by 2025.

Like the conservative plan, a Trudeau-led recovery this year and next depends on strong GDP growth.

In recent years, the Liberal government has highlighted net debt-to-GDP and deficit-to-GDP ratios as key metrics for Canada’s fiscal health, repeatedly stating that the country has the lowest debt-to-GDP ratio of any G7.

“These are important indicators. They show that the spending proposed today is sustainable and that the exceptional spending we have made to support Canadians through this crisis and stimulate a rapid job recovery is temporary and limited, ”the April budget said.

The debt ratio at all levels of government rose in the first quarter of 2021 from 38 percent in the previous year to 50.6 percent. The debt-to-GDP ratio is expected to exceed 51 percent this year before falling to around 49 percent by 2025, according to federal projections. The Liberal government predicts that the current deficit ratio of 8.2 percent will fall back to around one percent within five years.

Serge Coulombe, professor emeritus of economics at the University of Ottawa, said the commitment to a falling debt ratio shows at least some reluctance to finance policy.

“The cost of borrowing is extremely low. The danger is that this experience shows that the government can spend hundreds of billions of dollars on very low borrowing costs, and it is a great temptation. Spending, not collecting taxes, governments are extremely popular – to the point where inflation comes. « 

The immense inflow of money into the economy from government stimulus and aid spending over the past 18 months, combined with initially slowed production and stunted supply chains, has helped stimulate demand for various consumer goods and, in the face of a shortage of items, trigger higher prices.

« The danger of the inflationary mechanism is that it will drive interest rates up. It will be bad for any Canadians who have recently borrowed to buy houses at very high prices, » said Coulombe.

NDP chairman Jagmeet Singh said Monday that revenue-boosting measures like cracking down on wealthy tax evaders and raising the corporate and top income class tax rate can help support great programs like Universal Pharmacare, Guaranteed Livable Income and affordable housing.

« In all cases, we will responsibly handle debt and deficits, borrow when necessary to defend the services that Canadians and their families rely on, and work towards a balance in the future when it is reasonable, » it says on the NDP platform.

Conservative leader Erin O’Toole leaves the stage after speaking to the media in Ottawa on Tuesday, August 31, 2021. Canadians will vote in a federal election on September 20th. THE CANADIAN PRESS / Frank Gunn

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