Liberal leadership candidate Mark Carney announced his fiscal policy this week, vowing to split the budget into two streams while running “a small deficit on capital spending” but critics say the plan is unlikely to deliver results.
Carney held a press conference in Toronto Wednesday where he said under his leadership, the federal budget would be split between capital and operating spending streams.
He also accused the Trudeau government of spending “too much.”
“My government’s fiscal policy will focus first on reining in government spending, and that will help create the room for personal income tax cuts so that Canadians can keep more of their hard earned money and cope with the higher cost of living,” he said.
However, Conservative Leader Pierre Poilievre called his plan little more than a “sneaky account trick” in a statement released Wednesday.
“With his announcement today, Mark Carney is planning to cook the books with a sneaky accounting trick to take billions of dollars of new Liberal spending off the budget records,” wrote Poilievre.
“To be clear, under the current rules for government financial statements, capital investments are already amortized over the life of assets based on generally accepted accounting principles. That is not what Mr. Carney is proposing. Instead, he wants tens of billions of dollars of new spending to be hidden from the budget altogether despite the fact that Canadians will have to pay for every penny of them.”
Carney’s campaign presented a document outlining how he plans to balance the operating budget within the next three years, claiming that he will “adopt a fiscal rule to ensure that government debt-to-GDP declines over the budget horizon.”
“By catalysing major private investment while disciplining core government spending, this approach will grow our economy ensuring that the overall debt burden declines over time, while new jobs and higher incomes are created for Canadian workers,” wrote Carney.
But Renaud Brossard, vice president of Communications at the Montreal Economic Institute, said he doesn’t see anything new in Carney’s approach to fiscal policy.
“For the past decade, Ottawa has been trying this same approach of spending money on pet projects and calling it investment and the results have been more debt and a stagnant economy,” Brossard told True North. “To grow our economy, we don’t need more government intervention; we just need it to get out of the way.”
Carney has positioned himself as an outsider to both politics and the establishment but he served as a personal adviser to Prime Minister Justin Trudeau as far back as 2020.
“Prime Minister Justin Trudeau told Canadians he would balance the budget after a few small deficits, but instead of balancing the books he ran massive deficits and doubled the debt,” said Franco Terrazzano, federal director of the Canadian Taxpayers Federation in a statement released Wednesday.
“Carney needs to go back to the drawing board and come up with a credible plan to balance the budget and cut spending.”
Carney’s fiscal policy intends to leverage “AI and machine learning to boost productivity and cut costs across government,” which he believes could aid public services and ensure that funds are well allocated.
Additionally, he is calling for Canada to invest $2 trillion by 2050 to achieve net zero carbon emission, saying that the country must invest about $80 billion annually to become carbon competitive.
Despite his recent policy announcement, Terrazzano says no clear plan has been presented for achieving a balanced budget.
“Carney wants to run on his economic credibility, but he has no credible plan to cut spending or balance the budget,” said Terrazzano. “The next time Carney releases a plan to balance the budget, he should remember to include the plan to balance the budget.”