Liberals say they can prudently add $145B in new spending

The Liberals plan to find billions in savings by targeting tax breaks and tax evaders

Thestar.com
Sept. 26, 2015
By Les Whittington

A Liberal government would pump $145 billion into the economy in the form of new spending and tax cuts in hopes of sparking economic growth while running budget deficits until 2019, the party said in a costing of its four-year election campaign blueprint.

“The priority is jobs and growth,” Liberal candidate John McCallum told reporters after the fiscal document was released. “We have determined that is what Canadians really care about - investment in jobs now, not 10 years from now. And in order to have investment now, you need deficits now. But we will manage those responsibly and we will return to a balanced budget by 2019.”

The costing exercise also reaffirmed that if elected, the Liberals would target the rich to generate more tax revenues to keep the projected deficits - $9.9 billion in 2016 - from going any higher, and to pay for more spending and tax breaks for the middle class.

Raising income taxes on those earning more than $200,000 a year would increase Ottawa’s tax take by $2.8 billion a year, the party says. As well, a Liberal government would consider capping stock-option deductions, which Liberals say is a $750-million annual tax break going mainly to the super rich.

These changes would be part of a rehashing of available tax breaks and government spending on such items as advertising and hiring of outside consultants that the Liberals say would, in time, save Ottawa $3 billion a year.

McCallum defended this savings projection, saying the Liberals successfully found $3 billion in annual savings in spending when in government in the 1990s. He also noted that $3 billion is only a small portion of a federal budget approaching $300 billion a year.

If elected, the Liberals would earmark $5 billion a year on spending on bridges, transit and other infrastructure; $2 billion annually on improving the Employment Insurance plan; $900 million annually on jobs and training programs and $400 million a year on green technologies. Also, the Liberals would devote $133 million a year to new outlays for immigration to improve application processing times and bring in 25,000 Syrian refugees.

The plan also includes $325 million a year on improved support for veterans; $250 million annually for First Nations education; and $185 million a year to support arts and culture, including renewed investment in the CBC. And the Liberals would spend an extra $2 billion a year on a new Canada child benefit plan, which would replace the current family allowance and other child support programs. This income-tested program would provide more financial help for most families, the party says.

To pay for these promises, the Liberals would do away with the Conservatives’ new program of income-splitting for couples on their tax forms and cancel the increase in the annual contribution limit for tax-free savings accounts to $10,000 from $5,500. Liberal Leader Justin Trudeau has said these two recently introduced measures mainly benefit well-off Canadians.

The Liberals suggested they could raise several billion dollars in additional revenues from sales of marijuana after pot is legalized under their proposals. But the party said it was impossible at this point to provide an accurate estimate of those revenues so it did not include any in the fiscal document.

Before the campaign ends, the party will announce other spending promises totalling $1.1 billion a year. Among the coming promises will be plans on health-care spending and global warming, party officials said.

Trudeau will release a full campaign Red Book that includes all the promises before Oct. 19.

The NDP said the Liberal plan doesn’t add up and a Liberal government would be forced to trim government spending based on the document released Saturday. Trudeau “is just making it up as he goes along,” said NDP candidate Andrew Thomson.

Conservative candidate Pierre Poilievre responded by saying the Liberal campaign promises would mean billions of dollars in tax increases. “Conservatives will continue to lower taxes for families, all while preserving programs Canadians count on and balancing the budget,” Poilievre said.

But former parliamentary budget watchdog Kevin Page gave the Liberal rollout a passing grade, saying it was a “realistic” and “transparent” package. And “it makes the case for why we need to run these deficits because we have this weaker economy,” he told CBC-TV.