IFSD Fiscal Credibility Assessment New Democratic Party (NDP) 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 NDP Platform merits an overall PASS rating. The overall score is 31/44 across the three principles (70 percent).

The NDP’s 2025 federal election platform – Made for People. Built for Canada – emphasizes social spending and tax redistributive measures to strengthen the economy and address a range of policy challenges across eight priority areas – health care, housing, affordability, taxes, stronger Canada, green economy, Indigenous reconciliation and democratic institutions.

There are about 35 costed initiatives. Over a four year period, revenues are increased from wealthy Canadians and corporations by about $170 billion (including wealth tax, capital gains corporate surtax, minimum tax, reduction of loopholes, tariff revenue). There are about $70 billion in tax reductions to middle and lower income people over four years through GST savings (essential goods, Canadian made cars) and an increase in the Basic Personal Amount. Program spending is increased by about $142 billion with large increases going to health care, housing and a strengthening of the employment insurance system. There are no spending restraint (or reallocation) measures. In sum, these represent significant policy and financially material changes to spending and revenues. Significant changes do carry higher execution risk in both policy and financial terms. In static terms, the budgetary deficit is increased by about $48 billion over 4 years including higher interest charges and a modest (10 percent) contingency reserve tied to the higher deficit (not GDP).

The NDP platform does not use the PBO March 2025 Pre Election baseline which is a pre tariff outlook. It presents the fiscal outlook using the Bank of Canada (April) scenarios 1 (tariffs remain through 2026) and 2 (trade war escalates). In scenario 1, the real GDP assumption approximates the growth profile in the PBO baseline whereas in scenario 2 growth is modest in 2025 (0.8 percent versus 1.6 percent) and the economy shrinks by 0.2 percent in 2026. In scenario 1, the budgetary deficit is estimated to be

$47 billion (1.5 percent of GDP) and falls to $30 billion (0.8 percent of GDP) in 2028-29. In scenario 2, the budgetary deficit is higher and the profile more flat for the next four years. The NDP platform does show a declining debt-to-GDP ratio over the medium term in scenario 1 (not scenario 2).

The NDP Policy Platform was released on April 19, 2025 – after the leaders debates; during the advanced voting period; and eight days before election day.

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

NDP Platform score: 4/4

• The PBO Pre-Election (March 2025) baseline is used in the platform’s cost analysis.
• For the fiscal planning framework (presentation of budgetary balances and accumulated deficit) over the next four years, the NDP platform uses the Bank of Canada (April 2025) outlooks (both scenarios 1 and 2) which addresses the impact of tariffs.

1.2 Platform articulates economic challenges and corresponding measures.

NDP Platform score: 2.5/4

• Economic challenges are defined largely through experiences of individuals and households. They include US tariff impacts on the economy, but also ongoing challenges related to health care, housing and affordability.
• Significant strengthening of employment insurance (a key automatic stabilizer) is proposed, and funded in part from higher import duties.
• Capital investment measures, e.g., major national infrastructure, security and defence, that could incent economic development (based on priority areas) are largely absent.
• While support for individuals is necessary to navigate economic challenges, they are alone insufficient to meet the complex threats to Canada’s economic and territorial sovereignty.

1.3 Platform articulates fiscal challenges and corresponding measures.

NDP Platform score: 2.5/4

• The platform assumes that fiscal challenges will be managed with increased taxation of wealthy Canadians and corporations.  These efficiencies are not guaranteed, e.g., wealthier Canadians will have advice to work around a tax system.  The negative economic impact of such a large increase in taxes is not taken into account.
• Fiscal space is attributed to social measures targeting individuals and households with less concern for productivity challenges important to potential output growth and fiscal sustainability. No efforts are highlighted to improve efficiency in the public service or reallocate resources from underperforming programs.
• The large tax redistribution from wealthier households and corporations to middle and lower income Canadians will reduce income and wealth inequality which slows productivity growth. The higher taxes are used to fund new priorities which limits debt growth.

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

NDP Platform score: 3/4

• The platform considers economic risks beyond the PBO, with provision for a gloomier economic outlook.  With assumptions that trade and other economic impacts will persist beyond a year, the NDP’s platform proposes a small contingency fund to respond to unforeseen events.
• Full marks, however, cannot be attributed because of the emphasis on individual and household measures at the expense of economy impacting ones. The contingency reserve ties to measures and not GDP (economic outlook).

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

NDP Platform Score: 2.5/4

• The platform’s commitments are costly and rely on efficiency measures from increased personal and corporate taxation, including eliminating corporate subsidies in certain sectors.
• Additional fiscal space is being sought through the reduction of consultants ($8 billion), the closing of tax loopholes (nearly $25 billion); neither of which is articulated in the platform.
• Affordability and worker protection are the focus of the measures. There are limited measures that directly aim at protecting Canada’s economic and political sovereignty.
• The platform results in a modest deficit over the medium term and a declining debt-to-GDP ratio (under scenario 1, Bank of Canada). This would preserve fiscal room for future economic shocks.

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

NDP Platform Score: 3/4

• While generally fiscally sustainable, the measures present an overall growth in the size of the state.  Large tax increases are proposed which could result in economic instability and lower investment. Given global economic turmoil, long-term fiscal sustainability could be at risk.

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

NDP Platform Score:  3/4

• The NDP platform has a small contingency reserve for unforeseen economic and fiscal risks tied to the increase in the deficit. It is likely inadequate.
• The fiscal planning framework makes use of the Bank of Canada scenarios which include tariff impacts on the Canadian economy.
• Large tax increases are proposed to fund priority spending which limit increases in budgetary deficits and debt.

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

NDP Platform Score:  2/4

• The platform’s measures respond to challenges from trade and sovereignty at the individual and household level. 
• There is limited consideration of the macro level economic actions to incent sustainability and resilience.

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

NDP Platform score: 4/4

• The platform presents proposed measures across four fiscal years.
• The planning outlook accounts for gloomier forecasts and includes policy measures.

3.2 Platform provides sufficient detail on the proposed measures.

NDP Platform score: 2.5/4

• The measures are defined and substantiated relative to the NDP’s eight priorities. 
• The details on implementation of the measures is limited relative to the complexity of interjurisdictional arrangements required to execute them.
• Several major sources of funds, including the closing of tax loopholes, are not fully articulated in the plan.

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

NDP Platform score: 2/4

• The platform is focused on policy matters often outside of the jurisdiction of the federal government.  Most measures require provincial participation and agreement for execution, e.g., tenant protections, health care changes, etc. 
• The political, time, and resource commitments required to execute many of the measures are missing.