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The Liberals show their work

Aaron Wherry on the Liberal party’s ‘fiscal plan and costing’


 
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Shutterstock

Not counting explanatory notes, the Liberal party’s “fiscal plan and costing” includes 15 tables comprised of some 314 numbers, some of them big ($1.68 billion for public transit infrastructure), some of them small ($5 million to enhance the flexibility of the RRSP Home Buyer’s Plan). Generously, the Liberals have left you, the voter, a full three weeks to complete the actuarial analysis and comparison you’ve no doubt been waiting to complete since this campaign began so many days ago.

The Liberals presented this as a “credible plan” for “investment” and “real, immediate change.” If they are lucky, it will at least be “a document that does not include a glaring and consequential error of math.”

The platform costing is a requirement of the modern political campaign. The more detailed, the better. Though the more detailed, the more likely that one of the details will be challenged. In this regard, the patron saint of platform costing is poor Tim Hudak, the former leader of the Ontario Progressive Conservatives, whose “one million jobs plan” turned out to be something rather less after economists discovered “an inexcusable and elementary mistake in mathematics.” There but for the grace of Archimedes goes anyone with a hope of forming government. However much its particulars might not be scrutinized by the majority of voters, the costing remains a basically useful test of credibility. But social media is now lousy with economists and so the public release of a costing is now made just a bit more exciting by the acute potential for peril that is the thought of a dozen hounds with economics degrees baying at the door.

Three hours after releasing their plan, the Liberals were happily distributing the flattering words of Kevin Page, the former parliamentary budget officer. “I think it’s a good document,” Page was said to have said. “It’s a substantive document.” Eight days earlier, Page had been less kind in regard to the NDP’s costing. In that case, the New Democrats had relied on the economic projections of last spring’s federal budget. The Liberals, conversely, used a PBO report from July as the basis for its numbers—a baseline that takes into account more recent developments in the economy. We will never know whether the Liberals planned all along to use the PBO’s report, but they have at least the advantage now of satisfying Kevin Page.

The bottom line numbers for the Liberals are $9.89 billion, $9.52 billion, $5.72 billion and $1 billion—the first three being deficits, the last a surplus. (There is also the fun of a promise to announce a couple billion in surprises over the next few weeks.) But the Conservatives are particularly eager to fuss over other numbers: those listed to the right of the heading “Tax expenditure and Harper spending review.”

The Liberals claim here that they will review the “tax expenditures”—the accounting phrase for the various tax credits and exemptions that the federal government grants for the purposes of encouraging or rewarding certain behaviours—and general spending of the government and find measures that should be discontinued. Government advertising would be reduced, as would the use of outside consultants, while “an overdue and wide-ranging review of the over $100 billion in increasingly complex tax expenditures that now exist, with the core objective being to look for opportunities to reduce benefits that unfairly help those with individual incomes in excess of $200,000 per year.” So, for instance, the Liberals suggest they would cap the amount that be claimed through the stock-options deduction.

The Conservatives, in response, allege that this review will result in a “$6.5-billion dollar increase in taxes.” To get to that number the Conservatives would seem, while ignoring the spending aspect of the review, to have added together the projected savings—$500 million in 2016-17, $1 billion in 2017-18, $2 billion in 2018-19 and $3 billion in 2019-20.

Using a similar approach in 2011—adding together several years of projected savings—the Liberals alleged that there was an $11-billion hole in the Conservative party’s costing. In that case, the Conservatives pointed out that the figures were cumulative. That is, the figures were not to be understood as unique to each year, but rather part of ongoing effort that would ultimately amount to $4 billion per year. And so it is with the Liberals now: the party confirming to me that the savings are to be understood as cumulative and ultimately amounting to $3 billion.

Of course, it was also back in 2011 that Stephen Harper was basically unable to explain his $4 billion—something I like to think of as setting a precedent whereby every party gets a free $4 billion from now. By that standard, even if the Liberals are basically unwilling to fully account for their $3 billion, they would seem to be able to vaguely promise another $1 billion before anyone on the Conservative side is permitted to complain.

That the Liberals have specifically raised the issue of “tax expenditures” will likely delight economists—who view many of the Harper government’s tax credits as ineffective and wasteful—but will possibly inspire some fussing over which trinkets and coupons they might eliminate. Ideally, that might mean a debate about the utility and dispersement of those credits.

Not quite buried in the Liberal plan is a promise that would cost relatively little, but might bring some order to the exercise of costing. “We will also,” the Liberals write, “add the costing of political party platforms to the PBO’s mandate, as is the case in Australia and the Netherlands, so that starting in the next federal election, Canadians can review the fiscal plans of political parties from a credible and comparable baseline.”

The Liberal costing thus becomes a sort of meta-costing: a costing to improve costings. Here would seem to be a wise investment.


 

The Liberals show their work

  1. That you end the piece with the term “wise” within “Here would seem to be a wise investment” after running through the nonsense spouted by baby trudeau is despicable. You should preface your remarks with the disclaimer of your affiliation the same way that medical speakers do when they declare their financial interest in a product which they recommend. You have also begun with “Liberals Show Their Work” as if they had actually, unlike baby trudeau, contributed something to be called work and attempt to imply the positive connotation attached to it. You have however, ably demonstrated that the Liberals can add two and two, even if the twos are billions and they will borrow both of them. I do applaud though, your photo of the baby whose best feature and political career are behind him.

    • Are you implying that Aaron Wherry and MacLean’s have a conflict of interest by writing positive about Liberal financial Plan? And also you are calling the leader of the Liberal Party of Canada “baby trudeau”, instead of calling him by his real name. Would you like to be called bold, old or “fat larry” instead of Larry Nash, if that is your real name. Probably not. That shows only who you really are – a small envious man.
      Please read your post again and look in the mirror. I do not think that you will like what you see.

      • I am really looking forward to having a government that knows how to add and subtract. Its been far too long since we have had one. The first thing PM Harper and Co did was cut taxes and boost expenditures and put us into deficit. (before the mortgage crisis)

    • It certainly looks better than that Serviette Financial Plan the NDP released before they scattered from the presser, under presser. The Cons have nothing more to put out in policy, they are just scrambling now to put things in the window by using wedge politics, instead of numbers. I’ve learned one thing about Harper since he has been in power, every time he says he looks over financial reports, someone ends up on a police mug shot file.

      • It’s an insult that the Liberals released such a complicated document, three weeks prior to voting. Incredible actually.

  2. I’m not sure why the Liberals are bothering with this. Nobody is voting for the Liberals because of their economic plan, except members of government unions.

  3. I think I’ll take the former budget watchdog’s word, over internet posters. Many of whom are hired by Cons at $265 million for 3,300 internet brain washers.

    What type of political party needs to hire 3,300 people to make them look better? Maybe the type that has racked up 160 billion in additional national debt and one that has committed election fraud in all three elections.

    • I believe that your two statements answer themselves.

      The Cons run huge deficits as they spend a lot of money making themselves look better but never really helping the economy.

      From targeted spending on Gazebos and other excesses to 750 million in advertising paid by you and me it is obvious the fiscal plan for the conservatives. Too bad the “economist” Harper doesn’t know that the best way to cut deficits is by growing the economy. But nobody can accuse the conservatives of that.

      The Liberals on the other hand have the best plan and everyone knows it but they will not admit it.

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