We must hold the government accountable for deficits: Former parliamentary budget officer
Former Parliamentary Budget Officer Kevin Page said the onus will be on the Liberal party to convince voters budgetary deficits are acceptable, and needed in this period in time.
“Obviously right now the economy is still quite weak,” said Page in an interview. “In the Liberal plan, over five years, the deficit gets down to one percentage point of GDP. The economy is probably operating at a trend there. There’s definitely a structural deficit.”
“They [the Liberal party] will argue, in a world of very low interest rates, and growing GDP, that’s an affordable and sustainable plan.”
His comments come on the heels of Liberal Leader Justin Trudeau’s campaign platform, which outlined roughly $78 billion in spending over the next five years, and a slightly increased deficit projection of $336 billion over five years, up from $331 billion.
Page said he’ll have to wait and see the costed platforms of the other parties before making a fair assessment of the Liberals’ plan.
“Just with a fiscal lens, I think what we did see in the Liberals’ platform – and I’m sure we’ll see something similar in the Conservatives’ and NDP’s [platform] - a declining deficit track, the Liberals are basically saying that will become a fiscal rule. Declining debt to GDP ratio over the next number of years, that’s an important fiscal rule.”
He did, however, caution the Liberals’ forecasts, much like the Bank of Canada’s are fairly optimistic, with both banking on a strong second half of 2021.
“All of this is contingent on the public health issue,” said Page. “To what extent will we be able to deal with the Delta variant with growing vaccinations?”
“If we can’t open up the economy because of the public health crisis the way we’d like to, then I think there’s definitely some downside risk to GDP. Those deficit numbers will be higher, and we’ll probably see more support programs into 2022.”
The Liberal party platform included more details on Trudeau’s housing strategy, the cost of the party’s $10-a-day childcare plan, commitments to improve mental health care and long-term healthcare, as well as more details on the party’s proposed tax increase on bank profits.
With respect to the environment, the Liberals have earmarked billions for various restoration projects, $700 million to build electric vehicle charging stations, and have set a 2050 net-zero emissions goal for the oil and gas sector.
“We need to debate, with respect to the net spending is this really value for money?” said Page.
“We can look at the $78 billion, a lot of that is going to healthcare, some of that will go to housing, and seniors, and First Nation’s people. Is there enough money to support an adjustment for the business sector with respect to energy transition?”
When asked about the long-term implications of fiscal spending, Page said it’s important to listen to what business leaders have to say about party platforms and how governments will manage finances in a post-COVID world.
“If uncertainty goes up I think that’s obviously going to be bad for business investment.”
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