IFSD Fiscal Credibility Assessment : Green Party of Canada Platform 2019 Costing

The Green Party of Canada’s Platform Costing presents ambitious policy commitments without requisite economic and fiscal planning and transparency.

Information on the scoring framework is detailed in IFSD’s Assessment: Fiscal Credibility of 2019 Federal Election Platforms.

The Green Party of Canada released its Platform 2019 Costing document on September 25, 2019. This document followed the release of its policy commitments (Election Platform 2019 - Honest, Caring, Ethical Leadership) on September 15, 2019. It is the first party to release this information.

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 projections;
  2. Responsible fiscal management;
  3. Transparency.

The principles and scoring criteria are detailed in IFSD’s assessment framework.

IFSD finds that that the Green Party Platform Costing fails to meet all three principles, notwithstanding its significant use of the Office of the Parliamentary Budget Officer’s (PBO) costings and a commitment to balance the budget over the medium term. 

The Green Party Platform Costing can be applauded for its very ambitious policy commitments across many policy fronts including, but certainly not limited to, climate change and the environment.

Delivering on these commitments, however, would require an enormous annual increase in fiscal resources of about $60 billion per year which is more than 2.5% of GDP or roughly 20% of current budgetary revenues. IFSD believes this magnitude of policy change would require a strong economic and fiscal strategy as well as implementation plans and assessments of their impacts. The articulation of the assumptions underpinning the platform costing are missing at the present time.

There are serious gaps in economic and fiscal assumptions. There is no background document to support the fiscal baseline which does not appear to be either the PBO pre-election costing baseline or the 2019 federal Budget. There is no information or strategy to manage the substantive economic challenges involved in fundamentally restructuring the tax system over a short period of time.

Responsible fiscal management is not demonstrated as there are serious gaps in the medium- and long-term fiscal planning frameworks. Notwithstanding a commitment to a balanced budget over the medium term there is no strategy nor is there supporting information to guide the change in fiscal stance other than a large number of proposals (22 of which were costed by PBO). Furthermore, there is no statement of transactions information that highlights implications for spending and taxation (levels, growth, share of economy). There is no formal commitment to fiscal sustainability over the long-run other than verbal commitments made by the party leader. There are no fiscal adjustments in the plan for uncertainty.

On transparency, notwithstanding the use of PBO costing of major taxation and spending proposals, there are substantive gaps. The costing document does not provide details on the economic and fiscal outlooks underpinning the proposals. There are errors in the tables related to the magnitude and timing of increases in spending and revenues, including the double counting of a key measure. There is no clear implementation plan on key measures – something that is needed to inform citizens on major taxation and spending adjustments. One proposal that was discussed in the campaign – a commitment to a guaranteed livable income – is not included in the costing tables.

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

Green party platform score: 1/2

  • While the PBO baseline economic and fiscal forecasts are not used as the baseline, the Green Party Platform Costing adopts a baseline that generally aligns to accepted forecasts.  Its source(s) and assumptions, however, are not discussed.  The score reflects this lack of clarity.

1.2 Platform articulates economic challenges.

Green Party platform score: 0.5/2

  • The Green Party Platform Costing focuses principally on the potential economic implications of climate change with little attention to other potential challenges.
  • Issues such as an ageing demographic, income inequality, weak productivity growth and the declining role of the manufacturing sector are a few examples of economic and social issues that voters would likely expect the next government to address.  A credible platform articulates key challenges and its plans for addressing them. 
  • Economic uncertainties and risks can also significantly affect a party’s plans and should be identified and addressed in a credible platform.

1.3 Platform articulates fiscal challenges

Green party platform score: 0.5/2

  • The Green Party Platform Costing shows a fiscal plan that effectively reaches a balanced budget by year 5. 
  • There is, however, no reference to potential future fiscal challenges and no prudence to manage them.
  • Although the current federal fiscal structure is estimated to be sustainable in the long-run, Canada is not immune to economic and fiscal shocks.  Such shocks would significantly affect the sustainability of federal finances, particularly in the context of a plan that proposes significant structural changes to the Canadian economy.
  • The Green Party Platform Costing neither articulates fiscal challenges nor provides a plan for addressing them.

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

Green Party Platform Score: 0.5/2

  • The Green Party Platform Costing has a very limited list of fiscal policy objectives and indicators that will inform policy implementation and support accountability.
  • There is a commitment to a balanced budget which is highlighted in the costing tables. However, there is no written fiscal strategy regarding budget balance, debt to GDP ratios, spending and revenues.
  • No information is provided on spending or revenue growth either in nominal, cyclically adjusted terms, or as a share of GDP.

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

Green Party Platform Score: 1/2

  • The Green Party Platform Costing has an implicit (not explicit) commitment to fiscal sustainability.
  • Recent analysis by the Department of Finance and the Parliamentary Budget Office (PBO) indicate that the federal finances are sustainable.
  • The Green Party Platform Costing commits to a balanced budget over the medium term. Assuming that revenues and spending commitments are extrapolated over the long term, the platform commitments could be sustainable on a fiscal basis.  There is however, considerable risk, as expressed in PBO costings on the revenue generating capacity of some key measures, e.g. introducing a financial transactions tax.
  • The Green Party Platform Costing makes no expressed commitment to fiscal sustainability analysis, although there is a commitment to a broader tax review.

2.3 The fiscal planning framework contains adequate provisions for unforeseen events and/or forecasting errors.

Green Party Platform Score:  0/2

The Green Party Platform Costing does not include nor discuss prudence adjustments in the fiscal planning framework.

3.1 Platform provides economic and fiscal outlook for five years (2019-23) with details on key indicators, which incorporate the proposed policy measures.

Green party platform score: 0.5/2

  • The Green Party Platform Costing proposes fundamental changes to the workings of the Canadian economy, its sources of revenue, and the nature of spending.  Such plans can significantly affect Canada’s economic and fiscal outlooks. 
  • The Green Party Platform Costing does not provide any assumptions or information on how the significant increases in taxation and spending are expected to affect the behaviour of individuals and businesses with consequences for the future of the Canadian economy.

3.2 Platform provides sufficient detail on its proposed policy measures

Green Party platform score: 1/2

  • The Green Party Platform Costing contains a large number of policy proposals and initiatives but lacks detail.
  • PBO provides details on the most significant proposals that it has costed.  A platform proposal, however, should include details to enable voters to evaluate their efficacy. 
  • The Green Party Platform Costing does not outline desired outcomes, priorities and timelines, which are considered necessary for a transparent platform.

3.3 Platform provides a clear implementation plan for key policy measures

Green Party platform score: 0.5/2

  • The Green Party Platform Costing contains a number of bold and transformational initiatives but there is no mention of priorities and potential implementation challenges. For instance, implementing a universal pharmacare or dental care plan requires agreement from provinces. The Green Party Platform Costing is silent on how such an agreement may be achieved.  
  • In addition to having a comprehensive plan based on realistic assumptions, a credible platform must outline a detailed implementation plan with timelines and contingencies.