Promises, promises - it's election time again. But can the three major national parties pay for what they are promising in their electoral platforms?
We decided to do a little arithmetic to ascertain whether each party can pay for what it claims it will do, and still balance its budget. The full report is published at www.policyalternatives.ca, but here are some of the highlights.
To figure out whether the various parties can pay for what they say, we needed to find out if the federal budget surpluses over the next five years will be large enough to cover the parties' electoral promises. At the CCPA, we are fairly experienced in making these surplus projections. We have consistently been more accurate in our surplus projections than the federal government has for the last several years.
To make these surplus projections, we produced a "status-quo" federal budget projection for the next five years. This status-quo projection shows future government surpluses if no changes were made in federal taxing and spending behaviour.
In creating the status-quo budget, we have to make a number of assumptions. Our intention was to make the most uncontroversial assumptions whenever possible.
In our status-quo budget, we assume that government spending starts at a relatively low base and increases very modestly - just enough to cover increased costs associated with population growth, inflation, and increases in the costs of legislated programs for the elderly. This assumption largely matches the Conservative Party's point of view, while the Liberals and NDP assume a higher base level of spending.
Once we created the status-quo budget, we added and subtracted from it to reflect any changes to taxation or spending that the political parties are promising. We did not question whether the parties were correct in their costing of these promises- we just took them at their word. We wanted to know whether they can pay for what they say, not if they can pay for what they should have said.
The results? Based the specific assumption made to create this projection, the federal government has about $78 billion in spending room between 2004/05 and 2008/09.
And what do the various party platforms cost over the same time period? Conservatives:$89.4 billion. Liberals: $53.8 billion, New Democratic Party: $63.4 billion.
The Liberals and the New Democratic Party are able to balance the books over the next five years and post a considerable surplus. That may not be big news for the Liberals, who have been sitting on surpluses for many years now. The NDP ends up posting a larger surplus than they themselves forecast. So both the Liberals and the NDP have some margin for error and unexpected events.
However, by our calculations the Conservatives' platform promises would produce a cumulative deficit of $11.4 billion during this time period.
The Conservative Party says that their budget is in balance - they even claim that there will be money left over for paying down the debt. So why does our assessment differ from theirs?
When you delve into the Conservatives' numbers, you notice something interesting. They assume a very low "status-quo" level of government spending in each year of their platform. That's fine; we assume almost the same thing. But then they say that this fairly low level of spending is sufficient to both maintain government spending (with inflation and population growth) AND cover some of the promises made in their platform. Specifically, these promises consist of a whole page of future expenses (p. 44, Conservative Party platform) that were committed to by the current government. Since the Conservatives say they plan to honour these future commitments, they are part of the price tag of the Conservative platform.
You can't have it both ways. If you start from a low base of program spending, you can't then assume that that amount is sufficient to cover such extensive expenses.
Something's got to give. Either the Conservatives have to scale back on their promises, or they are intending to make some serious cuts in other types of government spending to cover this shortfall.
We are just doing the arithmetic, but the Conservative Party is proposing to run the government. Thus they should spell out for voters just exactly what they plan to do to make their numbers add up.
Ellen Russell is a Senior Economist at the Canadian Centre for Policy Alternatives. Sheila Block is an Economist with the United Steelworkers of America and a CCPA research Associate.