Budget officer blasts lack of detail in Liberals’ $100B stimulus plan

The government has said it cannot provide more details on its plans now because the money will start to roll out only after the pandemic is under control and the economy is ready for new investments to boost jobs and growth.

“Given the uncertainty of the virus, and our eventual recovery, it is premature for anyone to project exactly how the recovery will play out, or when spending will need to be wound down,” Freeland’s spokeswoman Katherine Cuplinskas said in an email.

Yet the parliamentary budget officer also suggested that if the Liberals’ spending plan is meant to help the economy return to pre-pandemic levels, it risks missing the mark.

The government has said the tap will remain open until several “fiscal guardrails” tied to the labour market are met. Those include improvements in employment, unemployment and total hours worked, though the Liberals have not revealed specific targets for each.

Giroux predicted each of those guardrails will return to pre-pandemic levels within the next 18 months, which “would suggest that the size and timing of the planned fiscal stimulus may be miscalibrated. In other words, it could be too much and too late.”

However, he added, if the purpose of the spending “is to make structural changes to the economy, that’s a different story.”

The Liberals have indicated that they plan to shake some up some parts of the economy, such as measures to help fight climate change, kick-start a bio-manufacturing industry to make vaccines and medication and build a national childcare system.

The budget officer also raised questions about the Liberals’ long-term plans to deal with a freeze on employment-insurance premiums implemented during the pandemic, which Giroux said will leave the government with a $52-billion deficit in the EI operating account.

He also flagged concerns around plans to expand how much the finance minister can borrow on behalf of the government by more than 50 per cent, including for the $100 billion in unallocated stimulus funds.

Freeland defended that plan during a parliamentary committee meeting earlier this week, describing it as a “prudent measure” to ensure the government has the flexibility needed to respond to the pandemic, but that it does not intend to borrow the money.

Conservative finance critic Pierre Poilievre told Freeland that if the Liberals don’t need the money, there is no need to raise the limit.

“The Liberals want the power to borrow hundreds of billions or dollars without telling taxpayers where the money will go or how it will be paid back,” Poilievre said in a statement Thursday.

“It is clear they want to continue COVID-level deficits indefinitely, which means a debt crunch or, at worst, a debt crisis.”

This report by The Canadian Press was first published Dec. 10, 2020.

Lee Berthiaume, The Canadian Press

by The Canadian Press

Budget officer blasts lack of detail in Liberals’ $100B stimulus plan

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