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How much is that spending promise in the window?

John Geddes on the costs and benefits of financial transparency


 
NDP Leader Tom Mulcair addresses New Democratic Party supporters in Saskatoon, Sask., on Monday August 31, 2015. (Josh Schaefer/CP)

NDP Leader Tom Mulcair addresses New Democratic Party supporters in Saskatoon, Sask., on Monday August 31, 2015. (Josh Schaefer/CP)

In a bid to ease voter anxieties about how an NDP government would manage federal finances, the party revealed its projections on Wednesday for how much Thomas Mulcair’s campaign spending promises will cost and how much his tax pledges will yield. But the exercise seemed bound to expose the NDP leader to some nagging questions about his party’s commitments on health and foreign aid.

The details the party released in Ottawa add up to $7.2 billion in new revenues and savings in 2016-17, which would be the first year of a Mulcair-led government if the NDP wins the Oct. 19 election. The top new cash-spinner under this NDP blueprint would be a two-point rise in the corporate income tax rate, which the party quite cautiously estimates would reap $3.7 billion. All that new revenue is set against $5.8 billion in proposed spending, of which the lion’s share, more than $3 billion, would go to the NDP’s promised spending on infrastructure and other job-creation promises.

Although the NDP had promised a line-by-line costing-out of its platform, the category of “health and seniors care” lumped together specific seniors care and doctor recruitment promises the party has made during the campaign, with its older pledge to restore a six per cent yearly increase in what Ottawa transfers to the provinces to help pay for their health services.

It all goes back to a deal worked out by the former Liberal government, under which transfers from Ottawa to the provinces for health are slated to grow at six per cent annually until 2016-17. Starting in 2017-18, however, the Conservatives had unilaterally said they would cut that “escalator” to as little as three per cent per year, depending on economic growth and the rate of inflation. In the past, the NDP has excoriated the Tories for the reduction, saying it amounts to $36 billion less for provinces to fund essential health services over a decade.

But Toronto NDP MP Peggy Nash, answering reporters’ questions on Wednesday, said increased health spending the party is budgeting will not all go to increasing those transfers, which the provinces can use on health as they see fit. Instead, the NDP wants Ottawa to have a direct say in how some of the money is spent. “We have committed to continue the six-per-cent escalator,” Nash said. “But I do want to be clear that some of that six per cent will include announcements on health care that our leader, Tom Mulcair, has already made this week. So we want to not only reinforce medicare, but we want to bring in a new era of medicare.”

On foreign assistance, Mulcair has previously endorsed raising Canada’s spending by billions of dollars a year to hit the United Nations’ recommended target of 0.7 per cent of GDP. But there was no hint in the figures the NDP released today of any amounts that would put Canada on track to achieve that level of generosity to the world’s poorest countries.

“We will be announcing in the coming days increased support for foreign aid,” said Andrew Thomson, the former Saskatchewan NDP finance minister, now one of Mulcair’s highest-profile candidates, running to unseat Conservative Finance Minister Joe Oliver in a Toronto riding. But Thomson added, “Within this framework, there will not be the ability for us to move toward the full 0.7 per cent. Obviously we have to work within the context of the current fiscal environment.”

If that “current fiscal environment” put a damper on spending on foreign aid, and left open big questions on health transfers, some of the other numbers the party provided should give Mulcair a solid footing as he debates the Conservatives’ Stephen Harper and the Liberals’ Justin Trudeau about economic issues in Calgary on Thursday night. Overall, the NDP was able to make a credible case for balancing the books—a centrepiece Mulcair commitment—while making good on key promises.

The room to spend comes largely, but not entirely, courtesy of that $3.7-billion annual hike in corporate taxes. There’s also $500 million a year from ending the employee stock option deduction, a tax break the NDP claims is overwhelmingly exploited by business executives making more than $200,000 a year. Arguably more open to question is the $500 million the NDP is forecasting it will collect through “tax integrity measures,” including ending the ability of rich individuals to shelter income in what are called Canadian Controlled Private Corporations. As well, the NDP promises to boost the Canada Revenue Agency’s resources to pursue tax evasion.

Releasing these details before the Calgary debate was a calculated gamble. Mulcair’s strategists clearly believe some Canadian voters harbour reservations about what the first NDP government at the national level might mean, and need to hear that the party isn’t relying on dubious numbers. But as the tough questions Nash and Thomson fielded today on health and foreign aid showed, that transparency comes with political costs as well as benefits. And on those, there can be no spreadsheets—only the final tally on Oct. 19.


 

How much is that spending promise in the window?

  1. The biggest fib shared by columnists and politicians is that they have sufficient understanding and knowledge of economics to discuss these issues.

  2. The Federal government under Mulclair won’t let provinces spend healthcare transfer money as they see fit but rather the feds will have direct say…..oh my….now he is going to take over as a little dictator deciding how all transfer payments (our taxpayer money) is spent without regard to the differences in demographics and needs within individual provinces. Are the provincial govts just going to be puppets then? Why bother having them? They cost a good bit of money.

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