Blogs & Comment

Revealed: Secret Ottawa Gravy Train

If elected, how will the Conservatives balance the federal budget?

The old cliché is that in politics, a week is a lifetime. It would appear that in an election campaign in Canada, seventeen days is another geological epoch.  The Conservative party released its platform today, and while a lot of it repeats promises made in the budget released on March 22,  the most striking thing about it is the extent to which it diverges from the budget on the crucial question of the budget.

The major news outlets all have decent summaries of the platform. Here is the CBC’s report, and here is the Globe and Mail. The platform is, obviously, a highly political document (repeatedly contrasting its promises with those of “The Ignatieff-led Coalition”), organized around core Tory themes of jobs, support for families, public safety, national defence, and low taxes.  It is an odd mix of promises – the now-familiar boutique tax breaks, a bizarre pledge to create a fund putting a heart defibrillator in every hockey rink in the nation—interspersed with ripped-from-a-beer-ad sloganeering about the Canadian Identity. There is also a surprising number of references to John Diefenbaker; perhaps Harper feels some affinity for the man who once ran on the campaign slogan, “everyone is against me except for the people”.

But by far the most interesting part of the platform is the pledge to eliminate the deficit a year earlier than promised in the March budget. In the budget, the deficit was projected to be $0.3 billion in 2014–15 with a surplus of $4.2 billion in 2015–16. But today’s platform says it will run a surplus of $2.8 billion in 2014-15. This will apparently occur despite the fact that there will be no new taxes, no cuts in transfers to the provinces or individuals, and no cuts in major programs. The Conservative platform even adds $3.5 billion in new spending over the next four years, not including a promise to retain the 6% annual escalator for health care transfers that Harper promised today, despite not once mentioning it in the platform.

So, how is this going to happen? According to Harper, it will come by simply slashing the operating cost of the federal government – notwithstanding the fact that the federal government, as a percentage of GDP, is about as big as it was in the 1960s.

Is any of this credible? Well, keep in mind that the deficit reduction forecasts in the budget were already seen as suspicious (Stephen Gordon called it “implausibly optimistic”). Meanwhile, over at Maclean’s, Aaron Wherry does a good job of following the shifting sands of fiscal prudence.

So where, ultimately, will this newfound wealth come from? Oh, from the usual places – “strategic reviews”, “Improved use of internal resources and administrative efficiency”, that sort of thing. Is any of this credible? It is hard to see how. At the very least, the Conservatives are asking us to believe that that there is a something like an $8-billion gravy train flowing through the corridors of power in Ottawa, which they have spent the last five years overseeing and doing absolutely nothing about.

But it also invites the question of why anyone should spend two seconds thinking about the Conservative promise to raise the TFSA limit to $10000, or to allow income splitting within families, once the budget is balanced.