Election promises add up to deficits — and that’s without calculating an economic slowdown

Conservative Leader Pierre Poilievre, left, and Liberal Leader Mark Carney shake hands following the English Federal Leaders Debate broadcast at CBC-Radio-Canada, in Montreal, Que. Photo by CHRISTOPHER KATSAROV/POOL/AFP via Getty Images files

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Both front-running candidates in Canada’s election have now presented platforms that rely on deficits to achieve their goals, but economists say that whoever becomes the next prime minister may have to adjust their spending and tax plans again amid a costly global trade war and a likely economic slowdown, both driven by the protectionist stance of United States President Donald Trump.

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Conservative Leader Pierre Poilievre was the last of the three main parties to release his costed platform, which he did on Tuesday, just six days before the election. It predicts declining deficits over four years, albeit smaller ones than those presented by Mark Carney’s Liberal Party, which has a $62-billion starting point. The Liberals propose to only balance an “operational” budget alongside ongoing spending through capital investments.

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Both parties are looking at hefty new gross spending commitments over a four-year term: $129 billion for the Liberals and $110 billion for the Conservatives, according to analysts at Bank of Nova Scotia.

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“The big story is that even under optimistic projections, we are looking at significant deficits for years to come,” Douglas Porter, chief economist at Bank of Montreal, said. “The Conservatives are clearly more concerned with keeping the deficit in check, although both projections are likely on the optimistic side, given the many campaign priorities.”

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David Detomasi, a professor of international business at Queen’s University’s Smith School of Business, said there are similarities in the two plans, which both call for more housing, military spending and resource development, though the Conservatives lean more heavily on cost cuts.

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However, he didn’t give either party an edge, citing the ongoing deficits in both plans and referring to sustained government spending using borrowed money as an “addiction” afflicting many governments.

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“I am not sure that either plan is realistic, and both, to a greater or lesser extent, will depend on deficits,” he said. “The electorate likes the benefits now and it’s a great election platform — promising new spending — but (it) will impose some serious cuts in the future.”

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As for the Conservatives’ cost-cutting promises, including to foreign aid, Detomasi said it’s difficult to judge what effect it will have on Canada’s economy and overall fiscal position.

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Both the Liberals and Conservatives are also promising tax cuts, and the bottom line is that there doesn’t appear to be enough there to pay for either party’s programs and spending plans and what they’ll need to deal with Trump, he said.

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“The Conservatives promise a tax break for people making under $57,000, but not much tax revenue comes from this group anyway,” he said.

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Rebekah Young, a vice-president and economist at the Bank of Nova Scotia, said the savings and revenue projections are “somewhat dubious” in both plans.