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The 2018 National Liberal Convention will welcome thousands of supporters from across Canada for innovative campaign training, policy discussions, special keynote speakers, and the election of the party's next National Board.
Our choices mean that our plan will bring meaningful and immediate change to the lives of all Canadians.
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.
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:
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.
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."
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"
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."
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."
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.
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.
The Canada Child Benefit (CCB) is projected to have a net new cost of $1.8 billion in 2016/17, rising to $2.0 billion in 2019/20. This reflects a CCB that invests $21.7 billion in 2016/17, the savings from cancelling income splitting ($2.0 billion), and replacing the CCTB, NCBS, and UCCB ($17.9 billion).
CCB cost projections are based on the number of children under 18 by family income (CANSIM Table 111-0013, Table 111-0022) applied against the CCB’s new benefit levels. Cost projections were compared and confirmed with Statistics Canada’s Social Policy Simulation Database and Model (SPSD/M).
To project future years, the average growth rate for child benefits in recent years was used, based on historical data from Canada Revenue Agency (CRA) and the Public Accounts.
After the announcement of the Liberal CCB, the Conservatives falsely claimed that Liberals had not accounted for federal revenue from the taxable UCCB. This was proven false. As part of that claim, the Conservatives released previously unavailable and more detailed Department of Finance data on CCTB/NCBS cost projections, which showed a reduction in the costs of child benefits in 2014/15.
If there are lower child benefit costs, then the cost of both existing benefits and the new CCB will be reduced. In fact, using those revised projected child population growth rates would reduce the net cost of the CCB below the $1.8 billion that we have estimated. We will, therefore, continue to use our higher starting projections to ensure the most prudent figure possible.
Our projection is based on a Library of Parliament analysis which determined that a new tax bracket of 33 percent on individual incomes in excess of $200,000 would have increased revenue in 2014 by $3.24 billion. With inflation, that estimate increases to approximately $3.4 billion by 2016/17. High earners may attempt to use tax planning strategies to avoid higher taxes. We will increase enforcement resources for the CRA to ensure tax liabilities are collected. However, we have also included a prudence factor of $600 million in our estimates. We project revenue of $2.8 billion in 2016/17, rising to $3.0 billion in 2019/20.
The government of Canada’s budget is approximately $300 billion per year, totalling over $400 billion per year when tax expenditures are accounted for. It is important that the federal government is persistently committed to ensuring federal expenditures are fair for Canadians, efficient, and fiscally responsible. In 2005, then-Prime Minister Paul Martin tasked National Revenue Minister John McCallum with a government-wide expenditure review, which resulted in $3 billion in booked annual savings within four years. We will meet this same target within four years, which in 2019/20 would represent significantly less than one percent of total federal fiscal and tax expenditure spending. Today’s challenges are different than those in 2005, and our priorities reflect the changes that are needed after ten years of Harper’s Conservative government. These include:
We will fulfill Canada’s G-20 commitment to phase out subsidies for the fossil fuel industry. In 2014, the Pembina Institute estimated that more than $1 billion in fossil fuel subsidies still existed in our current tax framework. We will direct the Department of Finance to conduct a detailed analysis of fossil fuel subsidies. A target of $250 million in reduced fossil fuel subsidies is our starting point, and a first step will be to allow for the use of the Canadian Exploration Expenses tax deduction only in cases of unsuccessful exploration.
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.