Justin Trudeau may be proposing a recovery plan that will “build back better,” but last week Erin O'Toole countered with a promise to “build back right.” Conservatives think they not only have a better plan for Canada, but that they have the right one. Can they convince Canadians?
Why Conservatives Think the Liberal Plan is Wrong
According to Conservatives, the Liberals' plan to invest heavily in green initiatives is both unnecessary and misguided. As finance critic Ed Fast puts it, “Instead of focusing on creating jobs, Liberals are fixated on implementing risky, expensive, and untested economic policies.”The key word here is “untested.” It links a familiar Conservative theme – that Liberals are big spenders – with a basic principle of conservative economics: that governments shouldn't pick winners.Conservatives of course oppose “big government” and, specifically, they oppose using public funds to intervene in the market to build or shape new industries. While there have been successes, history generally has not been kind to such efforts.Too often these projects turn out to be boondoggles and/or economic failures. Politicians, we've learned, can't keep their business objectives separate from their “political” objectives – such as how to win votes. As a result, they are prone to bad decisions.The lessons have been costly and painful, leading many economists to conclude that business investments should be left to businesses: governments shouldn't try to pick winners.The phrase “build back right” aims at nailing this message to the Liberals' recovery plan. Erin O'Toole is casting Liberals as dilletantes whose spending plans are out of control and threaten to drive the economy into a ditch.A recent Ipsos poll provides some corroborating news. Eight in 10 Canadians apparently now think Liberals should balance the budget rather than launch another round of spending.
Are Liberals Really Freelancing?
But are the Trudeau Liberals really freelancing with the economy? There are at least three reasons to see the Build Back Better plan differently.First, the economic trend that Liberals say is coming is not based on speculation. The science around climate change is clear and the conclusion that the global economy must transition to renewable energy is now a virtual certainty – whatever the skeptics say.Second, the timelines for this transition grow shorter by the day and the longer political leaders dally, the worse the situation gets. Pushing ahead aggressively is not just an economic imperative, but a condition of our social well-being.Finally, there are huge amounts of money to be made by countries whose economies emerge from this transition with vibrant renewable energy or cleantech sectors. Liberals want Canada to be a global leader in this new economy.So, from this viewpoint, a decision to invest in building a green economy is not about picking winners. Rather, it is about responding purposefully to a scientific imperative, a looming global crisis, and a unique economic situation. And as time is of the essence, the faster the better.That said, Conservatives will argue that, even if this trend is a given, it is always possible to put money in the wrong places. So, where should a transition plan spend?
What Kind of Spending is the Right Kind?
According to The Star's Alex Boutilier, Conservatives will divide the Liberals' upcoming budget into three categories:
- Category 1 includes COVID-related supports, which Conservatives agree with.
- Category 2 includes infrastructure investments that will boost long-term productivity, such as the creation of new power grids. The Conservatives agree with these too, but they must be clearly defined and can't interfere with markets (no picking winners).
- Category 3 includes spending that goes beyond the first two categories. These items range from spending on adventurous green schemes to new programs like child-care. While they may be part of the Liberals' Build Back Better plan, they do not meet the conditions of 1 or 2. Conservatives therefore see them as risky and/or unnecessary and reject them.