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The debt, deficit and federal spending
Canada’s economy is on the right track but an election may threaten growth, if you believe the federal Conservatives.
“Only Stephen Harper can deliver the stable national government that Canada needs to complete the economic recovery,” read the announcement on Day 1 of the election campaign.
In the government’s 2011 budget, rejected by all opposition parties, Harper put forward a low-tax plan for jobs and growth, that he promises will transform the country’s deficit into a surplus by the 2015-16 fiscal year.
With two months still left to report, the budget deficit so far this fiscal year is $27 billion. Coincidentally, Canadians have paid nearly as much in interest payments on the country’s $559-billion debt, during the same 10-month timeframe,
Debt is a key factor in a strong economy, according to economist Christine Brown in Camosun College’s faculty of business.
“The more money we have to spend on the interest payments ... the less money we have to spend on Canadians,” she said. “I don’t think Canadians realize how key it is,”
So are the Conservatives the party to fix the problem?
Not according to the budget they put forward, Brown said.
“This last budget was actually ... it was sort of insipid.”
Brown said the Conservatives will not address the deficit until after the election.
“They knew there was a possibility of an election being called and for that reason, it was very difficult for them to come up with any of the strong fiscal restraints (necessary for balancing the books).”
The University of Victoria’s James Lawson also questions the Conservatives’ position on the deficit.
A cynical reading of a strong Conservative economic position “could say that slaying the deficit is not entirely the medium-term goal,” said Lawson, a political science professor.
“Even if it hurts the deficit in the medium term, you cut taxes in order to expand the economy and the bigger tax base pays you back in the long run,” he said of the theory.
“Then you turn around and say, ‘the government is living beyond its means,’ and this becomes an opportunity to bring in the other side of economic Conservative thinking, which is shrinking the size of the state.”
The problem is there’s not good evidence to suggest tax cuts help to rebound the economy, he said.
On this point Brown disagrees – but both academics agree on a number of other points.
Both credit the Liberal party’s track record at reigning in deficits.
They also point to investment in education as critical to growing a strong knowledge-based economy.
“I believe that affordable education is the key to our future productivity, especially in B.C.,” said Brown.
Other economic policies that could benefit the local economy include a national social housing program, added Lawson.
“This region is really prospering by the boom in real estate for retirees,” he said. “That can really squeeze out people at the lower end of the income bracket.”
Federal investment would stimulate the construction trades and “make it easier for a key part of the local economy ... to stay in the region.”
Sasha Angus, economic development officer with the Greater Victoria Development Agency, also weighed in.
Though non-partisan, he praised the Conservative’s proposal to legislate a permanent annual investment of $2 billion in the gas tax fund to provide predictable, long-term infrastructure funding for municipalities.
The move would allow municipalities to invest in capital over the next five to 10 years, he said.
What would you do to build a strong economy? We asked candidates aiming to represent Victoria in the House of Commons.
“I’ll be the best salesman Victoria has sent to Ottawa since ... Sir John A. MacDonald,” said Conservative candidate Patrick Hunt.
“I’ll focus on creating jobs, especially in the area of employee training, where Victoria has a natural, untapped advantage,” he said. “I’ll actively market Victoria to corporate Canada and HRDC as an ideal centre for world-class leadership, management, accounting and sales training.”
Christopher Causton, representing the Liberals, said his party proposes “affordable tax rates, spending discipline, programs to boost youth employment and investments in education.”
Causton also took aim at the Conservative government, which he says, turned a $13-billion Liberal surplus into a $56-billion deficit.
“Their fiscally irresponsible policies are aimed at plunging Canada substantially deeper into a deficit for fighter jets, U.S.-style mega prisons and corporate tax cuts.”
NDP incumbent Denise Savoie added “the Conservatives’ HST debacle” to the list of alleged misspending. They’re examples of a “tax and spend” approach sometimes misattributed to the NDP, she argued. “The NDP prefers ‘tax fair and spend smart.’”
“Tax fair means making wealthy individuals and corporations pay their share,” she said. “Spend smart means investing in the green economy, an educated workforce, public transit ... and preventive approaches to health care.”
Green candidate Jared Giesbrecht shares the “smart” lingo. A strong economy is a smart economy, which entails balanced budgets and clear incentives for job creators, he said.
“We can reward hard work and waste reduction with meaningful tax breaks for citizens, and bring an end to corporate welfare, a tax on carbon pollution, and stable funding for municipalities.”