Choosing Investment Now

The Liberal Fiscal Plan and Costing

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Our plan makes different choices than the Harper Conservatives and the NDP.

  • We will cancel child benefit cheques for millionaires so that we can increase child benefits for the middle class and those working hard to join it.
  • We will increase the marginal tax rate on Canada’s top one percent so that we can cut taxes for the middle class.
  • We will conduct a review of all tax expenditures to target tax loopholes that particularly benefit Canada’s top one percent.
  • We will be honest about the government of Canada’s fiscal position, and base our projections on the recent report by the Parliamentary Budget Officer, instead of April’s outdated budget figures.
  • We will run modest deficits for three years so that we can invest in growth for the middle class and credibly offer a plan to balance the budget in 2019.

Our choices mean that our plan will bring meaningful and immediate change to the lives of all Canadians.

Our fiscal approach

The foundation of the fiscal plan over our mandate is a planning framework that is realistic, sustainable,prudent, and transparent. These are core principles advocated by Canadian fiscal experts.

A realistic approach recognizes that the economic and fiscal projections of the federal government have deteriorated since the budget was tabled in April. This year, 2015, started with a recession, the economic and fiscal impacts of which have been projected by the Parliamentary Budget Officer using the Bank of Canada’s July Monetary Policy Report.

Real GDP growth projections (%) 2015/16 2016/17 2017/18 2018/19 2019/20
Budget 2015 (April) 1.9 2.3 2.3 2.2 2.0
PBO 2015/16 - 2017/18 and projection
2018/19 - 2019/20
1.0 2.7 2.4 2.2 2.2
Projections in fiscal years – per PBO format

We project a reduction in the budget’s assumption for nominal GDP levels and fiscal balance, which only begins to mitigate in 2018/19 and 2019/20. This reflects the Bank of Canada’s projections for sharply lower real GDP growth in 2015, and slight increases in real GDP growth in outer years versus budget forecasts, as excess capacity from the recession is recovered.

External economic projections continue to change and these represent realistic projections for the years ahead. A new Liberal government will release a fall Economic and Fiscal Update so that Canadians can get a more accurate picture of the federal government’s revised position since April.

In every year of our plan, federal debt-to-GDP will continue to fall. Canada benefits from a low debt-to-GDP level and historically low borrowing rates. Our plan ensures that the government of Canada remains in a sustainable fiscal position. We have two fiscal anchors that guide our overall fiscal framework.

In 2019/20, we will:

  • Reduce the federal debt-to-GDP ratio to 27 percent
  • Balance the budget

Our plan is anchored in prudent forecasting, including restoring a contingency reserve as we return to surplus, and not budgeting for the positive fiscal impacts of new investments.

We will raise the bar on fiscal transparency. We will ensure accounting consistency among the Estimates and the Public Accounts; provide costing analysis for each government bill; restore the requirement that government borrowing plans receive Parliamentary approval; end the inappropriate use of omnibus legislation; and we will ensure the Parliamentary Budget Officer (PBO) is truly independent, properly funded, and answerable only, and directly, to Parliament.

We will also 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.

Planning framework

We were the first party in this campaign to announce our planning framework.

"...long-lived investment is actually a wonderful thing to be doing. It’s exactly the right thing to be doing."
DAVID DODGE
former Governor of the Bank of Canada and former Deputy Minister of Finance
(CBC Radio One, The House, August 29, 2015)
"[This] announcement by the Liberal Party of Canada has the potential to meaningfully improve the quality of life of Canadians in cities and communities across the country"
RAYMOND LOUIE
President of the Federation of Canadian Municipalities
(Federation of Canadian Municipalities, August 27, 2015)
"Canada’s Liberal Party is pushing what should be pushed in US– a major infrastructure initiative to get the economy going & build for future."
LAWRENCE SUMMERS
former Director, President Obama’s National Economic Council
(Twitter, @LHSummers, August 27, 2015)
"...significant and meaningful commitment to meet the urgent need for major infrastructure investment in cities and communities across Canada."
GREGOR ROBERTSON,
Mayor of Vancouver
(Office of the Mayor of Vancouver, August 27, 2015)

With the Liberal plan, the federal government will have a modest short-term deficit of less than $10 billion in each of the next two fiscal years – less than half the average Harper deficit of over $20 billion per year. After the next two fiscal years, the deficit will decline and our investment plan will return Canada to a balanced budget in 2019/20. Combining fiscal prudence with investments in economic growth, we will end the Harper legacy of chronic deficits and reduce Canada’s federal debt-to-GDP ratio each year.

The Conservatives and the NDP have based their planning framework on assumptions from the April 2015 budget, before it was understood that Canada was in a recession. Our plan is transparent and honest about the weakened fiscal position that the federal government is facing.

Planning Framework 2016/17 2017/18 2018/19 2019/20
April Finance forecast (including contingency) 2,700 3,600 4,600 7,800
Estimated impact of reduction in economic growth -2,100 -1,400 -1,200 -200
Revised forecast (PBO 2016/17 - 2017-/18) +
projection
600 2,200 3,400 7,600
New revenue 24,663 27,436 29,148 30,681
New investment announced 35,157 39,152 38,266 37,281
Planning framework with Liberal plan for growth – 9,894 -9,516 -5,718 1,000
Federal debt-to-GDP 30% 29% 28% 27%
Figures in millions of dollars

Our plan includes measures that, according to Department of Finance multiplier projections, will have positive impacts on economic growth, particularly infrastructure investment and measures for lower-income Canadians. This new economic growth would in turn improve the fiscal position of the federal government. With our plan’s level of investment, this would translate into additional billions per year for the fiscal bottom line. While these improvements to the bottom line would be material, consistent with Department of Finance practices, we have not included them in our planning framework.

Dollar impact on the level of real GDP of a one-dollar increase in fiscal measures
Fiscal measure 2009 2010 2010Q4
Infrastructure investment measures 1.0 1.5 1.6
Housing investment measures 1.0 1.4 1.5
Other spending measures 0.8 1.3 1.4
Measures for low-income households and the unemployed 0.8 1.5 1.7
EI premiums 0.2 0.5 0.6
Personal income tax measures 0.4 0.9 1.0
Business tax measures 0.1 0.2 0.3
Source: department of finance (2009)

New revenue

New Revenue 2016/17 2017/18 2018/19 2019/20
Replacing UCCB, CCTB, and NCSB expenditures 17,960 18,245 18,550 18,825
Tax expenditure and Harper spending review 500 1,000 2,000 3,000
Tax on the wealthiest one percent 2,800 2,856 2,913 2,971
Reduced EI premiums from $1.88 to $1.65 523 2,100 2,140 2,185
Cancel family income splitting (not pension income splitting) 1,995 2,050 2,110 2,165
Cancel education/textbook credits to boost grants 725 825 890 925
Cancel TSFA limit increase from $5,500 to $10,000 160 235 295 360
Continue to phase out fossil fuel subsidies 0 125 250 250
Total new revenue 24 663 27 436 29 148 30 681
Figures in millions of dollars

New investments

New Investment 2016/17 2017/18 2018/19 2019/20
Tax cuts and benefits 25,500 26,136 26,747 27,293
Infrastructure 5,025 5,025 3,450 3,450
Employment insurance 524 2,100 2,140 2,185
Jobs and training 2,155 2,254 2,267 1,689
Health 415 665 900 1,000
Environment and the economy 415 1,445 1,400 400
Arts and culture 185 380 380 380
Indigenous Peoples 275 575 455 355
Veterans 325 309 311 313
Immigration 133 108 58 58
Total new investment 35,157 39,152 38,226 37,281
Figures in millions of dollars

Tax cuts and benefits

Tax Cut/Benefit 2016/17 2017/18 2018/19 2019/20
Canada Child Benefit 21,725 22,160 22,600 23,000
Middle class tax cut 2,870 2,925 3,000 3,050
10 precent boost to GIS for single seniors 720 760 800 840
Index OAS/GIS to Seniors Price Index 55 105 160 210
GST rebate for new rental housing construction 125 130 130 135
Enhanced flexibility RRSP Home Buyer's Plan 5 5 5 5
Figures in millions of dollars

Infrastructure

Investment 2016/17 2017/18 2018/19 2019/20
Public transit infrastructure 1,675 1,675 1,150 1,150
Social infrastructure 1,675 1,675 1,150 1,150
Green infrastructure 1,675 1,675 1,150 1,150
Figures in millions of dollars

Employment Insurance

Investment 2016/17 2017/18 2018/19 2019/20
End new and re-entereing worker EI-discrimination 138 550 560 570
Reduce waiting period to one week 175 700 725 750
More flexible parental leave 30 125 125 130
Better access to compassionate care 48 190 195 200
Increase LMDA training funding 125 500 500 500
Reverse 2012 EI changes 8 35 35 35
Figures in millions of dollars

Jobs and training

Investment 2016/17 2017/18 2018/19 2019/20
Increased Canada Student Grant 750 800 825 850
Youth jobs strategy 455 455 435 125
Jobs and innovation 300 300 300 125
New training investment 200 200 200 200
Restore Labour Sponsored Venture Capital
Corporations tax credit
115 160 165 165
Increase Repayment Assistance Plan threshold to $25,000 115 119 122 129
Agriculture innovation and safety 85 85 85 85
Teacher tax benefit 60 60 60 60
Aboriginal skills and employment training 50 50 50 50
Building trades training equipment 25 25 25 25
Figures in millions of dollars

Health

Investment 2016/17 2017/18 2018/19 2019/20
New Health Accord - Home care 400 650 900 1,000
Public health healthy kids campaign (vaccinations, concussions) 15 15 0 0
Figures in millions of dollars

Environment and Economy

Investment 2016/17 2017/18 2018/19 2019/20
Low Carbon Economy Trust 0 1,000 1,000 0
Resource sector clean-tech strategies 200 200 200 200
Clean-tech production 100 100 100 100
National Parks programming and science 50 50 50 50
Water science and monitoring 50 50 50 50
Free entry to National Parks in 2017 15 45 0 0
Figures in millions of dollars

Arts and culture

Investment 2016/17 2017/18 2018/19 2019/20
Renewed investment in CBC/Radio-Canada 75 150 150 150
Export promotion of arts 10 25 25 25
Investment in NFB/Telefilm 10 25 25 25
Double funding for Canada Council for the Arts 90 180 180 180
Figures in millions of dollars

Indigenous Peoples

Investment 2016/17 2017/18 2018/19 2019/20
New education partnership with First Nations 100 200 300 300
First Nations education infrastructure 100 300 100 -
Increase to post-secondary student support
program
50 50 50 50
Public inquiry into missing and murdered Indigenous women and girls 20 20 0 0
Métis Economic Development Strategy 5 5 5 5
Figures in millions of dollars

New education partnership with First Nations is net of funding committed in fiscal framework, but yet to flow to First Nations. The total commitment to First Nations education is $750 million per year.

Veterans

Investment 2016/17 2017/18 2018/19 2019/20
Expanded Permanent Impairment Allowance 25 25 25 25
Increase Earnings Loss Benefit 38 42 44 46
New Veterans Education Benefit 80 80 80 80
Re-open nince VAC offices 7 7 7 7
Increase the Last Post Fund by 50 percent 5 5 5 5
Support for veterans and their families 100 100 100 100
Veterans' care Centres of Excellence 20 0 0 0
Expand Veterans' Affairs service staff 50 50 50 50
Figures in millions of dollars

Strengthening Communities

Investment 2016/17 2017/18 2018/19 2019/20
Guns and gangs police task forces 100 100 100 100
Community Heroes Fund 10 10 10 10
Investment in Nutrition North 10 10 11 11
Search and rescue 10 10 12 12
Greater enforcement resources for CRA 20 20 20 20
Court Challenges Program 5 5 5 5
Figures in millions of dollars

Immigration

Investment 2016/17 2017/18 2018/19 2019/20
Reduce application processing time 25 50 50 50
Eliminate assessment fee for caregivers 8 8 8 8
25,000 Syrian refugee intake 100 50 0 0
Figures in millions of dollars Download the full platform