NDP Leader Thomas Mulcair’s promise not to run a deficit in 2016-17, if he’s prime minister then, has to rank as one of the more audacious pledges made so far in this election campaign. In fact, Mulcair’s commitment is far bolder than the cagier comment one of his star recruits made when asked about ending deficits only last weekend.
Speaking on the campaign trail today in Hamilton, Mulcair conceded he has little control over the 2015-16 books, when the budget remains largely in Conservative hands, but sounded supremely confident when he vowed to balance them the following fiscal year. “We know, because we’ve got a lot of experienced people, that governing is about priorities,” he said by way of explanation. “Our priorities are not the same as Mr. Harper’s.”
One of those experienced people the NDP leader might well have been alluding to is Andrew Thomson, the former provincial finance minister in Saskatchewan’s NDP government, and now Mulcair’s star candidate in the Toronto riding held by none other than Joe Oliver, who is, of course, Prime Minister Stephen Harper’s finance minister.
Speaking on behalf of the NDP last weekend on CBC Radio’s The House, Thomson was noticeably more cautious than Mulcair was today, when asked if an NDP government would balance the budget. “You know, we have no idea what the current state of the books are,” he said. “In the longer term, the budget has to come into balance; I think there’s no doubt about that. Whether that happens in Year 1, I think, depends on what kind of a mess the Conservatives have left.”
Sometime between last Saturday and today, the NDP’s official take on ending deficits evidently hardened from Thomson’s hedged “in the longer term” to Mulcair’s unambiguous, “Our first budget will be a balanced budget.”
It’s far from obvious how Mulcair can be so sure. Even before yesterday’s stock market plunge, the economic outlook—and hence expectations for federal tax revenues—was unsettled. Back in late July, after the Bank of Canada cut its projection for Canadian economic growth this year, the independent Parliamentary Budget Officer (PBO) projected a $1.5-billion deficit for 2015-16, followed by another small deficit, $100 million, in 2016-17.
Mulcair commented on the PBO’s deficit forecast then, noting that the low price of oil was hurting the Canadian economy and, by extension, Ottawa’s tax-revenue haul. “The Conservatives put all of our economic eggs in the resource-extraction basket and, now that that sector is having considerable difficulty, it’s affecting everything else in the Canadian economy,” he said.
An NDP government wouldn’t be able to do anything about the Canadian economy’s reliance on oil within a few short months of the Oct. 19 election. So that reality will loom over the drafting of next winter’s federal budget, no matter who’s in charge. To the degree that the price of oil is a big deal for Canada, that worry hasn’t eased this week, as the price plunged on Monday before recovering somewhat today.
But deepening economic uncertainty goes far beyond oil, or even commodities in general. As our Chris Sorenson observes here, economists don’t have much useful experience assessing how businesses and consumers will respond to global anxiety that starts with China’s stock market cratering. (The Wall Street Journal‘s Greg Ip and Bab Davis write about China’s “murky politics, unreliable data and opaque decision-making.”)
All of which is to say that the prospects of Canada’s federal deficit vanishing soon were iffy already, but, after this week’s market turmoil, Ottawa’s fiscal outlook feels even more difficult to forecast with real confidence.