Overspending or investment? Conservatives, Liberals spar over deficit
Published Tuesday, February 23, 2016 1:31PM EST
Last Updated Tuesday, February 23, 2016 4:04PM EST
The Liberals faced tough questions on Parliament Hill Tuesday, a day after Finance Minister Bill Morneau announced a projected deficit of at least $18.4 billion for the next fiscal year.
Interim Conservative leader Rona Ambrose said during question period in the House of Commons that she sees three problems with what she referred to as Prime Minister Justin Trudeau’s “borrowing spree.”
“First … it breaks his promise to Canadians,” she said. “Second, all the borrowing he’s doing actually isn’t going to create jobs now,” she added. “Third … he has no way to pay it back unless he actually raises taxes.”
Trudeau responded by saying “investments” are needed because the previous government was “unable to create the kinds of opportunities and growth that middle class Canadians and those working to join the middle class truly need.”
Ambrose then painted a bleak picture of the economic situation in her home province, and said the Liberals’ response isn’t helping.
“Families are losing their homes, food banks are overwhelmed and suicide rates are up,” she said. “Alberta businesses need to be able to thrive, invest and create jobs… that means fast-tracking pipelines and calling off the Liberal plan for a carbon tax.”
“When’s the prime minister going to understand that throwing borrowed money around does not create jobs?” Ambrose added.
Trudeau responded that he had delivered help in the form of a $250-million stabilization fund transfer to Alberta, and added that the Conservative government’s approach to “bully their way into pipelines wasn’t working.”
Morneau then argued, in response to a question from Conservative MP Maxime Bernier, that Liberals have historically been better economic managers. He blamed the Conservatives for adding $150 billion to the national debt during their decade in power, after he said the Liberals spent the 1990s paying it down.
Conservative MP Kevin Sorenson, who is currently Chair of the House of Commons Standing Committee on Public Accounts, challenged Morneau’s statement, stating that the Conservatives had paid off $38 billion of debt in their first two years in office, and only ran it up during the recession so they could provide “a low tax plan and economic stimulus.”
“Why is the Liberal plan to spend, spend, spend?” Sorenson asked.
Moreau responded that the Liberal plan is to “invest, invest, invest.”
NDP finance critic Guy Caron also challenged the finance minister.
“Yesterday, former parliamentary budget officer Kevin Page questioned the numbers the finance minister used in his update,” Caron said.
Page made those comments on CTV’s Power Play, where he said the Liberals had built a $40 billion “fudge line” into their numbers. Page said the decision might allow the Liberals “some room so they can come in a little better than expected."
“Today in committee, the minister persisted in using these numbers that seemed to come from thin air,” Caron went on. “This is troubling for Canadians … particularly low-income Canadians, seniors, families, those who are unemployed.”
Morneau said his government “promised to be open and transparent,” adding that he is proud to say he plans to “move forward” with the Canada Child Benefit in the upcoming budget. “This is an historic decision to make an enormous difference,” he added. “We’re going to help nine out of 10 Canadian families with children and we’re going to bring hundreds of thousands of children out of poverty.”
Morneau faces finance committee
Earlier Tuesday, Morneau was grilled by opposition members of the all-party House finance committee, who demanded to know why the anticipated shortfall is so much larger than the figure the Liberals campaigned on last fall. Before taking office in November, Trudeau had said that he would run “modest” annual deficits of $10 billion over three years in order to boost infrastructure spending.
Lisa Raitt, the Conservative finance critic, accused Morneau Tuesday of squandering the budgetary surplus he inherited from the Conservative government and suggested that the newly-projected deficit is a result of overspending by the Liberal government.
Morneau responded by saying that, although the Conservatives had balanced their last budget, it was “clear” from the outset that there would be a shortfall in 2015-16 fiscal year.
The much larger deficit estimate for 2016-17 was calculated on the basis of lower-than-expected growth, lowered oil prices and overall projections from the private sector, Morenau told the finance committee.
He repeated his desire to be “transparent” with Canadians about the latest figures, and said that the government is taking a “fundamentally different approach” to an economic downturn.
Morneau said the government must “invest” in the economy and balancing the budget at all costs would have forced him to either significantly raise taxes or make big spending cuts. Neither would be prudent, he said.
Despite the downgraded projections, the government still has “fiscal flexibility” because it has a healthy GDP-to-debt ratio, Morneau added.
Conservative MP Phil Coleman said Morneau “missed every anchor” outlined in his mandate letter, which notes the government’s goal to balance the budget in 2019-20.
Morneau said the government is still committed to balancing the books, but its first priority is to “make investments to improve growth.”
He also blamed “wrong policy choices of the previous government” on the lack of growth over the past decade.
Morneau said more details about the Liberals’ economic plan will be released when the federal budget is tabled on March 22.