Ottawa is abuzz. With the deficit approaching $400 billion, word is out that a second round of spending is on the way, this time for the recovery. John Ivison reports that “the number being bandied around Ottawa is $100 billion” – a huge sum by any measure. Could this be a bluff?
In politics, expectations are everything and Justin Trudeau’s team has been working overtime to ratchet them up – way up. So, what if Budget Day comes and this much-discussed figure of $100 billion is, say, ‘only’ $50 billion?
We think a lot of people – many of them Liberals – will breathe a sigh of relief. Conservatives, on the other hand, could be in a panic. Erin O’Toole appears to have hitched his wagon to the big number. In an interview with the Globe and Mail last week, O’Toole announced that, while he would balance the budget, he would take the next decade to do it.
In the meantime, a Conservative government would do some spending of its own: “economic growth is as important as controlling spending,” he adds, reassuringly.
The play here is obvious. The new leader doesn’t want to be cast as a skinflint or deficit slasher. In these troubled times, he needs to look responsive and caring so, with the budget rumours flying, he decided to define himself before Trudeau did it for him.
Now he is on record supporting the idea of a recovery plan but insisting that his approach will be different from Trudeau’s. For example, he singles out the impact of the pandemic on immigrants, many of whom own small businesses that have been damaged or destroyed by the shut-down.
Whatever the differences, it’s a safe bet that a Conservative plan will include a lot of the same things as the Liberal plan, such as funds for the provinces to improve long-term care for seniors. And, of course, O’Toole agrees on the need for a credible climate change plan.
The real difference seems to be in the scale. A hundred billion dollars will buy the Liberals a lot of stuff. But it also gives the Conservatives the fiscal space to design a plan that is substantive but far less costly.
They could spend $30 or even $40 billion and still be $60 or $70 billion lower than the Liberals. That’s a lot of money – more than enough to drive their narrative of Trudeau as a reckless spender.
However, as that $100 billion deficit shrinks, so does O’Toole’s fiscal space. If on Budget Day the deficit number is “only” $50 billion, this puts him in the same ballpark as the Liberals. Any clear contrast will be gone, and O’Toole will need to tell a different story.
Now he must convince people that his plan is better, and that will take lots of explaining. But as they say in politics, if you’re explaining, you’re losing.
In this situation, we think that any narrative advantage O’Toole may have had disappears. The advantage now lies with Trudeau, whose project will seem forward-looking, visionary, and fiscally responsible.
So, is Trudeau bluffing? We don’t know. But lots of smart people, from senior government officials to blue Liberals, are said to be deeply concerned that the government is about to do something reckless.
A public reproach from this crowd could start an avalanche of criticism. A recent poll by Nanos Research finds that three quarters of Canadians – in all regions – are already concerned about the deficit.
Is the $100 billion figure vital to the government’s plan?
Wherever this number came from, it can’t be the result of rigorous costing. As far as we know, the government doesn’t have a full-fledged plan yet. The cabinet is supposed to meet in mid-September to hammer one out. The number is therefore almost certainly a “notional” one and could be scaled down.
Would $50 billion do it? This is still a lot of money – enough to fund a serious climate change plan and strengthen social programs. The skeptical smart crowd would certainly breathe a sigh of relief, and the pundits would have a much smaller target to shoot at.
And if the government finds that the project really needs more money, it can always borrow more next year. We now know that O’Toole wants a recovery plan and is in no hurry to balance the budget.
Finally, there is the prospect of an election. While we think this is unlikely, should one be called, campaigning to add another $100 billion to the deficit sounds risky to us. Cutting that number in half would calm a lot of rattled nerves and take the wind out of the Conservatives’ sails.
Makes sense to us. Are we missing something?
Dr. Don Lenihan is Senior Associate at the Institute on Governance and an internationally recognized expert on public engagement, governance, and policy development. For more, visit his website at: www.middlegroundengagement.com
Andrew Balfour is Managing Partner at Rubicon Strategy in Ottawa.