Conservative fiscal update over-promises and under-delivers

Let’s be honest, the Conservatives’ hollow promise to eliminate the debt focuses on the net debt, which is not even within the federal government’s control. The Finance Minister is intentionally misleading Canadians. There is nothing new here. In order to illustrate more clearly, their intentions it is as if the owner of a $200,000 home with a remaining $100,000 mortgage says that he no longer has a debt because the "freed up" value of the home is the same as the mortgage that is left.

In order to improve our quality of life and create a more innovative economy, we need to create opportunities for all Canadians through concrete, substantial investments in education and skills training, build the right investment environment here in Canada and help Canadian businesses take advantage of opportunities in important merging markets, such as China and India. This plan does nothing in those areas. The Conservatives’ so-called economic plan won’t even come close to positioning Canada as an economic leader in the 21st-century global economy.

We criticize, but people are asking what would you have done? In the 2005 Economic and Fiscal update, which was lost due to the election, the Liberal government committed to more than $2.1 billion in new funding in 2005-06 and over the next five years to sustain Canada’s leadership in university-based research; $485 million over five years, to implement CAN-Trade, a new international commerce strategy that will better position up to 5,000 Canadian firms in priority markets such as China and India, and $590 million over the next five years to support transportation infrastructure investment; a Working Income Tax Benefit to reduce the employment barriers faced by low-income Canadians starting in 2008. Increasing the basic personal amount – the amount of income that all Canadians can earn tax-free – by $500 and reducing the lowest personal income tax rate from 16 per cent to 15 per cent; and increasing the income level at which the top tax rate begins to apply starting in 2010, to make Canada more attractive to highly-skilled and mobile workers. These were concrete measures.

Missing from the Update were any new measures to assist low-income Canadians, or any solution for solving the so-called fiscal imbalance with the provinces. Instead, the minority Conservative government has already cut $6 billion over the next five years from provincial transfers. In addition, the Conservatives’ series of tax breaks fall quickly on the heels of $1 billion in cuts to social programs which help the most vulnerable Canadians.

Speaking to the Economic Club of Toronto last Friday, Finance Minister Jim Flaherty admitted the Conservative government has a more optimistic outlook for the Canadian economy than most economists. The private sector economists predict growth of 2.75 per cent for 2006-07, while the finance ministry puts it at 2.8 per cent, down from three per cent in the May budget.

Economists agree that in order to increase productivity, create a more innovative economy, or create greater opportunity for Canadians, corporate tax cuts must be balanced with investments in education and skills training, research and development and diversifying trade infrastructure. The update commits to an expenditure review which is code for more cuts to social programs.

With an aggressive tax-cut agenda and the grandiose promises they have made, which social programs will be next on the chopping block?

Lucienne Robillard is the Liberal Member of Parliament for Westmount-Ville-Marie and Deputy Leader of the Official Opposition.