Canada’s federal Liberal Party promises to run bigger deficits if re-elected on October 21.
Prime Minister Justin Trudeau unveiled his party’s election platform on Sunday, the centrepiece of which is a pledge to increase the nation’s debt to deliver tax cuts and increase government spending. The costed platform of the incumbent Liberal Party outlines a $57-billion plan over four years -- worth about half a percent of annual gross domestic product (GDP) -- and pledged to pay for it with deficit spending.
Trudeau said Sunday that deficit spending is needed to stoke economic growth and provide struggling households with help. The prime minister’s critics, however, say the Liberals have been spending too much in good times and aren’t prepared should a global recession hit.
Under the Liberal plan, Canada’s deficit would peak at $27.4 billion next year, bringing it above 1% of GDP for the first time since 2012, before dropping to $21 billion by 2023. That far exceeds the $14 billion deficit recorded in 2018. In total, the plan would add an additional $31.5 billion in deficits and bring the cumulative budget gap over the next four years to $93 billion.
Trudeau and his Liberal Party hope the higher deficits will give them a potential wedge issue in a campaign where the two major parties have rolled out similar policy objectives -– from tax cuts to helping first time home buyers and senior citizens. Conservative Leader Andrew Scheer has yet to release his full fiscal projection.
Opinion polls show the Liberal Party is neck and neck with the Conservative Party among decided voters, despite Trudeau’s campaign being jolted by revelations he wore black and brownface makeup as a younger man. Projections tabulated by the Canadian Broadcasting Corp. (CBC) show neither party holding enough support currently to win a majority government when Canadians go to the polls on October 21.
