JOCK FINLAYSON
By Jock Finlayson, ICBA Chief Economist
BRITISH COLUMBIA – ICBA Economics has scrutinized the election platforms of the two main parties – Mark Carney’s Liberals, and Pierre Poilievre’s Conservatives. Both platforms reflect the rude shock Canada has received from the dramatic shifts in U.S. trade and foreign policy under President Donald Trump. Bolstering the foundations of the Canadian economy, building homes and infrastructure faster, boosting spending on defence and security, and diversifying trade and forging closer economic ties with markets outside of North America make an appearance in the platforms of the Liberals and the Conservatives.
That said, we prefer the policy roadmap outlined by the Conservatives. That is partly because we view the Conservative platform as more aligned with the priorities, free enterprises values, and policy ideas of ICBA and our members. While Mr. Carney has been at pains to differentiate himself from his predecessor Justin Trudeau – whose nine years in office saw soaring federal deficits, a steadily expanding federal government, depressed business investment, and overall economic stagnation – in the end the Liberal platform does not mark a departure from the big spending, heavily interventionist agenda of the Trudeau years.
Some Highlights of the CPC Platform
There are several elements of the CPC platform that we find encouraging.
On fiscal management, the Conservatives pledge to shrink Ottawa’s ballooning deficit from something in the vicinity of $50 billion in 2025-26 to $14 billion by 2028-29. This translates into a steadily declining debt/GDP ratio. In contrast, the Liberals doubled the accumulated debt under Trudeau and remain wedded to big deficits that will push the debt higher and put upward pressure on future debt-servicing costs. Outside of recessions, we see no good reason why Ottawa should be running large operating deficits.
On spending control, the Conservatives intend to shrink the bloated federal public service (whose ranks exploded by ~40% under Trudeau), undertake a broad program review, and pass a “one for one” spending law that will require offsetting expenditure reductions for every “new” spending dollar. Under the Conservatives, federal budgetary policy will be guided by a credible fiscal anchor and a sustained commitment to contain expenditures. We don’t have confidence a Carney-led Liberal government would follow the same path.
Turning to tax policy changes, the Conservatives will trim the lowest federal income tax rate from 15% to 12.75%; eliminate the industrial portion of the federal carbon tax; scrap the Liberals’ planned capital gains tax hike; expand the amount that Canadians can put into Tax-Free Savings Accounts; allow working seniors to earn an additional $10,000 per year before having to pay federal income tax; and ensure the GST does not apply to new housing development costing less than $1.3 million per dwelling unit. These are all positive steps.
Turning to regulation, energy policy and natural resource development, there is much to like in the CPC platform. A Conservative government will:
- Repeal the Impact Assessment Act (better known as the “No New Pipelines Act”) as well as the Liberal law that banned oil tankers off Canada’s west coast.
- Scrap the Trudeau government’s very costly “clean fuel regulation,” its proposed oil and gas emissions cap, and the “clean electricity standard” that would see Ottawa purporting to take control of electricity generation – long a provincial responsibility — across the country.
- Fast-track potential new LNG projects in B.C. and Atlantic Canada.
- Develop a National Energy Corridor to accelerate the movement of Canadian energy and other natural resource products to global markets.
- Streamline and modernize the legislative and regulatory frameworks governing Canada’s ports, which fall under Ottawa’s control and presently rank very poorly for efficiency and competitiveness compared to ports in other trading nations.
- Simplify and harmonize the National Building Code to make is less expensive to build new homes.
Two other economic-related CPC platform promises caught our eye.
First, a Conservative government will keep immigration below the growth of the housing stock and the availability of health and other service. The current government has already adopted a policy to reduce permanent immigration and significantly scale back the numbers of foreign students and “temporary workers” admitted to Canada. Per the CPC platform, it’s not clear how much further a Poilievre government would go. While the immigration system spun out of control under Justin Trudeau, there is a risk of “overdoing it” as policymakers look to recalibrate immigration policy and related programming. Canada needs a healthy, ongoing inflow of skilled and talented newcomers to help grow the economy and offset the effects of escalating retirements and population aging.
Finally, the CPC platform talks of launching an “oligopoly review” and taking steps toward “open banking,” as a way to inject more competition into Canada’s sclerotic, heavily regulated economy. We strongly favour this policy direction and hope the next federal government will go even further toward enabling new firm entry and boosting competition in long-protected sectors.
The views, opinions, and positions expressed by our columnists and contributors are their own and do not necessarily reflect those of our publication.
