Erin O'Toole announced Tuesday the Conservatives would balance the budget "without cuts'' within a decade. They said neither the Liberal budget nor the NDP platform had a plan to cut deficit spending.
At an Ottawa campaign event, O’Toole acknowledged the state of the current deficit. The Trudeau Liberals borrow more than $400 million a day, resulting in a $354-billion deficit last year owed mainly to emergency spending measures prompted by the COVID pandemic.
He pledged to roll back stimulus spending after the first year and gradually decrease it over five years.
"Under Justin Trudeau, we are heading further down the road of recession, not the road to recovery," said O'Toole on the current federal government.
Statistics Canada found Canada’s economy contracted by 1.1 percent between April and June, possibly dropping further last month. This marks the country’s worst quarterly stretch from the onset of the pandemic.
"We will help highly affected sectors caught by the pandemic so that those jobs are preserved. We will grow the economy so that we can get back to balance in a responsible and equitable way without cuts," he said. The Conservative economic recovery assumes annual GDP growth of three percent, a target reached only once since 2011.
Like the Liberal recovery plan, a Conservative-led recovery hinges on strong growth in gross domestic product this year and next, who notes Canada is falling behind the US in economic growth.
Compared to the Liberal and NDP approaches, there is no mention of cutting budgets. Both parties intend to invest in economic and social programs to bolster the economy and generate revenue.
"In all cases, we will manage debt and deficits responsibly, borrowing when required to defend the services that Canadians and their families rely on, and moving towards balance in the future when it's prudent to do so," reads the NDP platform.
However, the Canadian Taxpayers Federation doesn’t buy the Conservative approach either, citing their platform is not costed and lacks a "credible plan" to balance the budget.
"Federal government spending is at all-time highs, but the Conservatives can’t seem to find any fat on the budget to cut," said Franco Terrazzano, Federal Director with the CTF. "The Conservatives hope the economy will balance the budget. But what happens if reality isn’t as rosy? Will the Conservatives find savings or let the debt balloon?"
The Liberal’s budget in April unveiled significant social program spending with smaller deficits in 2025. However, no surplus was projected until 2070.
The federal government won’t return to a balanced budget until 2070 under the status quo, according to supplementary data released by the Parliamentary Budget Officer in its most recent Fiscal Sustainability Report.
According to the Fraser Institute, the federal government increased spending between its November 2020 economic statement and its 2021 budget despite projecting an uptick in revenues. Total revenues were forecasted to be $19.2 billion higher than previously expected in 2021/22, though program spending projections increased by roughly $51.0 billion.
Federal per-person spending (inflation-adjusted) will reach $12,697 this year, the second-highest level in Canadian history and 38.7 percent higher than during the 2009 recession.
The federal government projects another $2.7 trillion in debt before balancing the budget in 2070. This is in addition to the current $1 trillion in existing federal debt. Interest charges will cost taxpayers about $3.8 trillion by 2070.
"Next time the Conservatives release a plan to balance the budget, they should remember to include a plan to balance the budget," said Terrazzano. "It sounds like O’Toole thinks the budget will balance itself, but taxpayers know that’s not how it works."
The CTF identified examples of wasteful spending by the current federal government that a Conservative government could reverse, signalling a departure from the big-spending trends of 2020 and 2021.
Terrazzano suggested rollbacks of the two MP pay raises provided during the pandemic. MPs are eligible for raises each year on April 1, based on the average annual increase in private-sector union contracts with corporations that have more than 500 employees.
The CTF found each MP received an extra $3,200 on April 1. Ministers received an extra $4,700, and Trudeau got an additional $6,400, according to contract data published by the Government of Canada. The federal government stopped the automatic pay raises between 2010 and 2013 in response to the 2008-09 recession.
The basic MP salary is $182,600, while ministers receive $269,800 and the prime minister receives $365,200 annually.
Canada lost more than 700,000 private-sector jobs during the worst of the pandemic, according to Statistics Canada.
Other notable suggestions include ending corporate welfare, such as the $295 million the federal government gave to the Ford Motor Company, and forcing political parties to pay back the federal wage subsidy meant for struggling Canadians.
Lesser suggestions include ending the $206,040 per year expense account for former governors general and abolishing the Mission Cultural Fund that spent $8,813 on a sex-toy art show in Germany.