IFSD Fiscal Credibility Assessment Conservative Party of Canada Platform 2025

Summary

The Institute of Fiscal Studies and Democracy (IFSD) assesses the fiscal credibility of election platforms of the major parties according to three principles:

1. Use of realistic and credible economic and fiscal assumptions;
2. Responsible fiscal management;
3. Transparency.

The principles and scoring criteria are detailed in IFSD’s platform assessment framework, originally developed ahead of the 2019 federal election.

These assessments are designed to test for coherence between policy proposals and fiscal and economic plans, as well as the realism of assumptions.  Platforms are political documents and are expected to provide reliable and realistic proposals, making them different than budgets or government documents that have different requirements for accuracy, realism, and transparency.   

The 2025 election takes place in an historic context. 

Global economic growth is expected to slow due to the imposition of US tariffs and increased policy uncertainty and geo-political tension.

The OECD (March 2025 interim economic update) highlights risk for macroeconomic volatility ahead including market corrections and an unexpected downturn. Their advice is for governments to take action to preserve fiscal sustainability and ensure fiscal room to address future shocks and spending pressures. Efforts are required, according to the OECD, to reallocate spending towards activities that will support longer term growth.

Canada is on the front line of the US trade war given the strong trading relationship and dependency on the US market. Public threats by President Trump on Canada’s political sovereignty has shocked and unified citizens. The historic political and economic challenges are taking place when Canadian governments continue to address challenges related to affordability from the fallout of the global pandemic and a series of longer term policy challenges related to productivity, income and wealth disparity and climate change. 

IFSD finds that the Conservative Party Platform merits an overall pass rating. The overall score is 33.5/44 across the three principles (76 percent grade).

The Conservative 2025 federal election platform – Change: for an affordable life; for safe streets; for Canada first – emphasizes a smaller government role to address challenges faced by Canadians with a focus on tax reduction, deregulation and limited spending. There are a number of priority policy areas including affordability, housing, public safety, government management, national security, well-being and identity.

There are about sixty costed initiatives including nine economic impact measures that are estimated to result in additional revenues for the federal government.

Over a four-year planning period there are $75 billion in tax reductions (including lower personal rate, capital gains, GST on homes, and seniors). Tariff revenue is assumed to be $20 billion in 2025-26 (one year) and improved tax compliance is assumed to result in about $13 billion over 4 years. The nine economic impact measures are assumed to generate about $60 billion over four years and comes largely from deregulation and greater housing investment.

Total planned spending is reduced by $23 billion over four years as new spending is more than offset by program cuts and efficiencies. There is $35 billion in higher spending with 80 percent targeted to national security and housing. Program cuts total $22 billion over four years with the majority coming from a reduction in foreign aid and spending on crown corporations like the CBC. Spending efficiencies total $34 billion with more than two thirds coming from the reduction in the use of (external) professional services.

The Conservative platform utilizes the PBO March 2025 Pre-Election outlook which does not incorporate the economic impact of the US tariffs and global fall-out.

Higher Canada import duties on US goods and services are assumed for one year, 2025-26. At this juncture, it is an optimistic planning baseline. 

The projected budgetary deficit falls from $31 billion (1 percent of GDP) in 2025-26 to $14 billion (0.4 percent of GDP) in 2028-29. The Conservative planned deficit track is lower than the PBO pre-election outlook, notwithstanding proposed tax reductions ($75 billion) because of the incorporation of estimated budget savings from de-regulation and additional housing investment ($60 billion over four years), estimated efficiencies ($34 billion) and specified program reductions ($22 billion).

It is noted that the reduction of the budgetary deficit in a period of economic weakness caused by a trade war and high uncertainty is unusual and typically not advisable for advanced economies with strong credit ratings.  Normally, the government balance (deficit) is allowed to rise to help stabilize the economy. Traditionally, positive estimated economic impacts from measures are not shown to impact the planning balance. The estimates used in the Conservative platform are considered excessive relative to Department of Finance rules of the thumb (1 percent increase in real GDP generates about $5 to 6 billion reduction in the deficit after one year). The economic impact estimates could be highlighted for use of prudence in a planning context. As with other platforms, there is considerable execution risk with proposed efficiencies measures resulting in slippage of fiscal savings.

The Conservative platform does not have an explicit fiscal target. They have fiscal rules with respect to deficit offsets on new spending measures (one for one) and a commitment not to raise taxes without referendum. The Conservative fiscal planning framework is consistent with a declining debt-GDP-ratio and overall fiscal sustainability.

The Conservative platform was released on April 22, 2025 – after the leaders debates; after the advanced voting period; and six days before election day.

1.1 Platform uses the latest PBO baseline economic and fiscal forecast.

Conservative Party Platform score: 3/4

• The PBO Pre- Election (March 2025) baseline is used in the platform’s fiscal and cost analysis and fiscal planning framework for deficit and debt calculations.
• It does not include economic impacts of tariffs. Revenues from higher import duties on US goods are included.
• The platform also includes nearly $60 billion in additional revenue generated from the proposed measures, something that the other major federal parties did not include.
• The platform also includes nearly $13 billion in revenue from more aggressive enforcement of the use of tax havens.
• It is considered an optimistic planning scenario, at this juncture.

1.2 Platform articulates economic challenges and corresponding measures.

Conservative Party Platform score: 3.5/4

• The platform focusses on the housing crisis, affordability issues, and burdensome regulations. The platform claims that reducing taxes and regulations and providing incentives for building new houses will unleash significant economic activity, which will address those economic challenges.

1.3 Platform articulates fiscal challenges and corresponding measures.

Conservative Party Platform score: 3.5/4

• The platform underlines the rise in the budget deficit and debt over the last ten years.
• The platform focuses on reducing the size of government through tax reductions ($75 billion), program cuts and administrative savings.
• Additional focus areas are on housing, through the subsidizing lower development charges; defence spending to reach the NATO target by 2030 and border security.
• Achieving the fiscal objective of a deficit of $14 billion in 2029-29 fiscal year, with $35 billion in new spending measures over that period, is heavily dependent on generating nearly $60 billion in additional revenue through growth, $22 billion in spending cuts; $34 billion in administrative efficiencies.
• The fiscal plan is dependent on growth through the reduction of “red tape” and deregulation.
• The platform does not set a fiscal target except for a one-for-one rule for new spending.

1.4 Platform accounts for global uncertainty and threats from the US.

Conservative Party Platform score: 2.5/4

• The platform briefly discusses the economic challenges resulting from the increases in tariffs by the U.S. government, but neither proposes new measures to meet those challenges nor accounts for the uncertainty created by the threats from the U.S. in its own estimates of revenues and spending.
• Other than the defence and border spending commitments, the measures in the platform do not specifically address the geopolitical and economic risks.
• The platform leverages tax cuts of $75 billion over four years, “red tape” reduction and targeted spending to address Canada’s economic issues
• The platform assumes economic and fiscal forecasts improve in the next fiscal year and does not include a risk provision.
• The platform cuts many of the significant climate-related programs of the federal government without proposed replacements to address climate change and economic transition.

2.1 Platform commitments are consistent with a defendable medium-term fiscal strategy and framework.

Conservative Party Platform Score: 2.5/4

• The platform’s commitments are aligned to an optimistic view of the medium-term fiscal framework. There are downside risks to both economic and fiscal forecasts.
• Budgetary deficits decline from 1 percent of GDP to 0.4 percent over the 4 year planning horizon. They are lower than projections from the PBO and for most other OECD countries. The strategy to reduce the budgetary deficit in a period of economic weakness and high uncertainty can increase economic stability risks.
• While most of the spending cuts can be accomplished, most of the revenue increases are based on a significant increase in economic activities, which may not materialize, especially in the current period of heightened economic uncertainty.

2.2 Platform’s commitments maintain long-term fiscal sustainability.

Conservative Party Platform Score: 3.5/4

• The platform shows a decrease in deficit and debt over the forecast period.  The platform commitments are fiscally sustainable over the long-term (debt-to-GDP ratio is expected to decline in the long run); but,
• The risks associated with the current economic turmoil and the lack of measures to address the slowing economic performance, could undermine long-term fiscal sustainability.

2.3 The fiscal planning framework includes adequate provisions (prudence) for fiscal risks, economic risks, and unforeseen events.

Conservative Party Platform Score:  2.0/4

• There is no consideration of prudence and risk in the optimistic assumptions of the economic and fiscal outlooks.
• The fiscal planning framework for the Government of Canada does not typically book additional revenues for new measures and should not book efficiency savings before having been achieved, since past results have proven disappointing. 
• However, given the relatively small size of the spending package, $35 billion, the risk to the revenue and expenditure forecast are largely mitigated, in this context.

2.4 The fiscal planning framework contains fiscal room to address challenges to Canadian sovereignty.

Conservative Party Platform Score:  3.5/4

• The platform includes two principal provisions, defence spending and border security, to address Canada’s territorial and economic sovereignty.
• There are few significant economic measures to address resilience of infrastructure and supply chain, other than planning to maintain the measures of the previous government.
• Significant fiscal space remains to address unforeseen measures (or resources would be reallocated to achieve them).

3.1 Platform provides economic and fiscal outlook for five years (2025-29) with details on key indicators, which incorporate the proposed policy measures.

Conservative Party Platform score: 3/4

• The platform provides a fiscal outlook for four years. There is little analysis beyond the basic presentation of numbers (e.g., no presentation of analysis of positive economic impacts).

3.2 Platform provides sufficient detail on the proposed measures.

Conservative Party Platform score: 3.5/4

• The proposed measures include priorities and objectives. There are several instances where timelines for implementation are included. Timelines to achieve results in, where there are revenue dependencies, in particular, appear to be short.  This creates a risk to the integrity of the fiscal plan.
• Significant regulatory changes maybe outside of the scope of the federal government to achieve on its own.  This puts both the policy plan and the fiscal plan at significant risk.

3.3 Platform provides a clear implementation plan for key policy measures.

Conservative Party Platform score: 3/4

• The platform privileges tax cuts, spending cuts and administrative efficiencies to drive the fiscal plan.
• The implementation of key measures are somewhat defined. Considerations are lacking on the synchronization of implementation with revenue and savings assumptions.
• The platform does not discuss the impact of administrative reductions on service delivery for Canadians.
• The platform does not discuss what cuts might be undertaken should the aggressive revenue and expenditure assumptions not materialize.