Erin O'Toole and the Big Fat Tory Lie

At least Canada's conservatives are consistent. When they're out of power they all promise to get Canada's financial house in order if and when they again hold the reins of power.

Today it's Erin O'Toole's turn to spread the lie.  An O'Toole government, he says, would eliminate Canada's federal deficit within 10 years.

So how would the giant O'Toole balance the books? Two ideas - massive increases in immigration and doubling down on Canada's fossil energy resources.

Mr. O’Toole’s platform called for ending the federal carbon tax and reversing two Liberal bills: C-48, banning oil tankers off the northern B.C. coast, and C-69, which changed the review process for large projects. The two bills were strongly opposed by Canada’s energy sector.

Last month, Mr. O’Toole posted a photo of himself jogging with his son while wearing a black T-shirt that expressed his love for Canadian oil and gas. Alberta Premier Jason Kenney often wears shirts with the same message.

Ten years to balance the books? How about three years, huh?

“What I think we need to do is get [to] balance over a decade or so,” Mr. O’Toole said in reference to the deficit. “We’re going to come up with a plan that shows there is no bogeyman with the Conservatives, that we’re going to try and get back to a balanced budget in two or three years or something like that.

“We know this [pandemic] has been a shock, but we also know that economic growth is as important as controlling spending. And our caucus, we’re going to talk about that."  

The opposition leader sounds about as delusional as Chuckles, the guy he just replaced.

When it comes to fiscal prudence the Tories have a lengthy and hard-earned record and that record is lousy.

This brings to mind a speech given by Tory hack, Joe Oliver, in 2015 where Oliver couldn't wait to take shots at the other Trudeau, Pierre. iPolitics neatly reduced Oliver, and conservatives, to smoking ashes.

On April 8, Finance Minister Joe Oliver stood up before the Economic Club in Toronto and delivered what can only be described as one of the greatest “fantasy economics” speeches in decades. 

It was a message from a parallel universe — one in which the Harper government delivered ‘sound economic management’ through the recession (it didn’t), the economy recovered its pre-recession growth pattern (it hasn’t) and Ottawa is delivering tax relief for the average Canadian household (it isn’t). Stranger still, it’s a parallel universe where Pierre Trudeau is still around, haunting us.

Oliver conveniently overlooked the economic upheaval of the Trudeau era including recessions and near runaway inflation that resulted in the imposition of wage and price controls. If Pierre Trudeau is to be faulted with recklessness it was in his 'cooperative federalism' initiative whereby many provincial programme costs would be shared equally between the feds and the provinces. The prospect of 50 cent dollars sent many premiers on spending binges like drunken sailors on port call.

...In fact, the fiscal record of Trudeau Senior actually looks pretty good when compared to that of Brian Mulroney. Under Trudeau, the average annual deficit was 2.9 per cent of GDP between 1969-70 and 1979-80; under Mulroney the average annual deficit was 6.7 per cent of GDP between 1983-84 and 1994-95. 

Between 1983-84 and 1994-95, program spending under Mulroney fell from 18.4 per cent of GDP to 15.7 per cent, while the revenue share actually rose from 15.6 per cent to 16.6 per cent. This weak performance, along with rising interest rates, resulted in the debt burden dramatically increasing from 37.5 per cent in 1983-84 to 66.6 per cent in 1994-95.

...In 1984, the Conservative government actually published a document — ‘Agenda for Economic Renewal’ — which stated that, without major action to cut program spending and/or raise taxes, the federal debt burden would double by the end of the decade. Which is exactly what happened.

So what about the Liberals? Oliver is hardly going to give any credit to Jean Chretien and Paul Martin for getting the federal government out of the worst fiscal crisis it had ever faced. 

According to Oliver, the Liberals balanced the budget “by hiking taxes, cutting vital programs and slashing billions in transfer payments.”

True enough but when the Liberals were returned to government, the federal government was teetering on insolvency - thanks to Mulroney.

But with debt as a percentage of GDP at a post-Second World War high and with ever-increasing interest rates due to a lack of confidence in financial markets, everything had to be put on the table. Once the federal government achieved a balanced budget, that interest rate risk premium quickly disappeared and all levels of government benefited from lower borrowing costs. The Liberals then introduced a 10-year plan which put the major transfers to the provinces on a sustainable and growing track. 

In 1994-95, the federal deficit was 4.7 per cent of GDP. By 1997-98 the deficit had been eliminated and the federal government ran surpluses for the next nine years. The federal debt was actually reduced by $90 billion; the debt burden fell from 66.6 per cent in 1994-95 to 31.4 per cent in 2006-07.

Enter the fiscal genius, Stephen Harper.

How does this compare to the Harper government’s fiscal record? In 2006-07, the Conservatives inherited a surplus of $13.8 billion — which they turned into a deficit of $5.8 billion within two years. 

And they were in deficit each and every year. In 2009-10, the deficit reached its peak of 3.5 per cent of GDP. They are desperate now to show a surplus in 2015-16 — one surplus in nine years. Since Harper was elected, the federal debt increased by over $150 billion, wiping out the reduction in federal debt achieved under Chretien and Martin. Not much to boast about there.

Jobs, jobs, jobs.

At the end of 2014, the unemployment rate was higher than at the end of 2008. The labour force participation rate was lower than in 2008. The employment rate (the percentage of the adult population employed) was lower than at the end of 2008. The youth unemployment rate was higher than at the end of 2008. The share of total employment made up of full-time jobs was less than in 2008 — and the quality of jobs had sunk to its lowest level in a quarter of a century.

Numbers don’t lie, but people do. It’s one thing to spin your failures as successes — it’s another thing entirely to try to present a decade of fiscal failure as one long triumph. The journalists going into the budget lockup will have their work cut out for them, trying to separate the Harper government’s fiscal fantasies from the true record of the past ten years.

The Tories are like their Republican cousins. They're like Trump. They endlessly proclaim their fiscal prudence and economic prowess but that's not what they deliver once in office.  They're lousy managers, devoid of vision and discipline. There's no reason, no reason whatsoever to imagine Erin O'Toole would be one bit better than Mulroney or Harper. No reason whatsoever.