IFSD finds that the Conservative Party of Canada’s Platform 2021 merits an overall rating of ‘pass,’ with ratings of ‘good’ across two of the three assessment principles (realistic economic and fiscal assumptions and transparency) and a ‘fail’ on one principle (responsible fiscal management).
Summary
The Conservative Party of Canada released the costing of its 2021 platform, “Secure the Future: Canada’s Recovery Plan,” on September 8, 2021. The platform commitments emphasize securing economic growth and jobs, the country, mental health, and accountability. Commitments proposed in the platform are intended to support individuals, businesses, and promote growth through innovation, workforce participation, and economic diversification.
The Institute of Fiscal Studies and Democracy (IFSD) assesses the fiscal credibility of election platforms of the major parties according to three principles:
- Use of realistic and credible economic and fiscal projections;
- Responsible fiscal management;
- 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.
IFSD finds that the Conservative Party Platform Costing merits an overall ‘pass,’ attributed to its ‘good’ baseline economic assumptions and the feasibility of the implementation of its proposed measures. Its score is reduced by its failing score in responsible fiscal management, given its lack of consideration of risk, no explicit prudence, no medium-term fiscal target, no commitment to long-term fiscal sustainability, and no mention of a medium-term fiscal anchor beyond a long-term balanced budget. In particular, the 6% increase to the Canada Health Transfer (CHT) may require significant reductions to other spending measures or increases in revenue measures to maintain fiscal sustainability.
The overall score is 11.5/18 across the three principles.
Using the Office of the Parliamentary Budget Officer’s (PBO) baseline fiscal and economic forecasts, the Conservative Party’s Platform Costing projects declining deficit and expenditures into fiscal year 2025-26. The platform commits to investments for jobs and economic growth, despite assuming economic growth beyond the PBO’s baseline economic forecast.
Estimated expenditures for platform commitments are front-end loaded, with net expenditures declining from a peak of roughly $30B in 2021-22 to -$0.7 in 2025-26. Platform commitments have an estimated total cost of approximately $51B over five years. The deficit is projected to decrease from $168B to approximately $25B over the same period, which reflects in part, the $27B in savings from the cancellation of the childcare program announced in Budget 2021.
The implementation of most proposed measures is expected to be straightforward, with exceptions such as, the Personal Low Carbon Savings Account. Information in the platform is sufficient to consider potential impacts of measures on Canadians, and differences with the status quo and proposals from other parties.
1.1 Platform uses the latest PBO baseline economic and fiscal forecasts.
Conservative Party Platform score: 2/2
− The platform uses the PBO’s baseline economic and fiscal forecasts. Many spending and revenue measures have been costed by the PBO.
1.2 Platform articulates economic challenges.
Conservative Party Platform score: 1/2
− Increased fiscal stimulus over the next few years is estimated to increase output, employment, and productivity. A boost to economic performance is expected, notably through jobs and output growth. The projected increase in productivity is modest.
− Economic multipliers are provided for several deficit financed measures.
− The news release accompanying the platform costing provides some misleading information about Canada’s economic and fiscal situation and outlook. This information is not consistent with the PBO baseline projections for growth or the platform’s proposals to increase budgetary deficits over the next five years.
1.3 Platform articulates fiscal challenges.
Conservative Party Platform score: 1/2
− The Conservative Party’s Platform strategy is to strengthen economic growth and reduce budgetary deficits gradually over the long-term. There is a long-term commitment to restore budgetary balance, but it is beyond the medium-term planning period and the next political cycle.
− The long-term commitment to balance the budget is not expressed in consideration of fiscal sustainability. Achieving a balanced budget in a single year is not the same as stabilizing debt to income over the long-term. Financial markets will be more concerned with fiscal sustainability than balanced budgets.
− High budgetary deficits are raised as a policy concern. Yet, the platform proposes to increase budgetary deficits, without addressing planning risks (e.g., higher than expected interest rates).
2.1 Platform commitments are consistent with a defendable medium-term fiscal strategy and framework.
Conservative Party Platform Score: 1/2
− The Conservative Party Platform’s proposed fiscal framework shows a declining deficit over time, with the intent of balancing the budget in ten years, beyond the next political cycle. All spending increases are front-end loaded in the first three of five fiscal years.
− Approximately $51B in spending is proposed in the Conservative Party’s Platform. The budgetary deficit is projected to decline to the PBO’s baseline level mainly because of savings of approximately $27B (these savings are attributed to the cancellation of the childcare programme announced in Budget 2021, as well as revenue generation by reducing the fiscal gap through further investment in the Canada Revenue Agency, which is subject to significant uncertainty according to the PBO).
− Other than the stated objective of balancing the budget in ten years, there is no fiscal anchor or fiscal target in the medium-term. 2.2 Platform’s commitments maintain long-term fiscal sustainability.
Conservative Party Platform Score: 0.5/2
− The Conservative Party’s Platform shows a declining deficit over the medium- term. However, the new CHT escalator of at least 6%, if ongoing, would put the long-term balanced budget target and long-term fiscal sustainability at significant risk. Achieving fiscal balance in one year does not guarantee that the balance will be maintained over time.
− The 6% increase to the CHT may require significant reductions to other spending measures or increases in revenue measures to maintain fiscal sustainability.
2.3 The fiscal planning framework contains adequate provisions for unforeseen events and/or forecasting errors.
Conservative Party Platform Score: 1/2
− The Conservative Party Platform’s fiscal framework does not include provisions for COVID-19 related risks or a prudence factor for unforeseen events.
− The platform increases the budgetary deficit in 2021-22 and 2022-23 through stimulus-style measures. These measures are substantiated as an attempt to stimulate the economy, rather than a risk provision for unforeseen events.
3.1 Platform provides economic and fiscal outlooks for five years (2021-26) with details on key indicators, which incorporate the proposed policy measures.
Conservative Party Platform score: 1.5/2
− The Conservative Party Platform relies exclusively on the PBO’s fiscal and economic projections for the entire medium-term planning horizon. Proposed measures are presented with associated costs and expected impacts for substantive revenue and expenditure commitments.
− In terms of presentation, the costing document does not include discrete revenue and expenditure lines or debt levels.
− The platform provides information on how the proposed measures would impact households, regions, and economic sectors.
3.2 Platform provides sufficient detail on its proposed policy measures
Conservative Party Platform score: 2/2
− The platform provides sufficient detail on the nature of proposed measures, including their goals and their expected impacts on Canadians.
− PBO cost estimation has been undertaken on most measures providing assurance as to impartiality on their fiscal impacts.
− There is sufficient information to allow voters to consider potential differences with the status quo and proposals from other parties.
3.3 Platform provides a clear implementation plan for key policy measures
Conservative Party Platform score: 1.5/2
− The Conservative Party Platform’s spending measures, in general, are clearly defined and relatively straightforward to implement and do not appear to pose significant downside fiscal risk, within the medium-term forecast.
− Many measures include specific approaches to implementation and have time-limited fiscal profiles.
− Most of the commitments do not appear to require major new program development, complex machinery changes or the (re)negotiating of federal-provincial agreements.
− On the revenue side, closing the tax gap, will need to be better articulated as it is both new and a significant contributor to projected revenues.
− On the policy side, the climate change strategy aims to achieve lower targets than other federal parties and relies less on market mechanisms with the proposal to create a government administered, Personal Low Carbon Savings Account.