NDP plans will leave long term fiscal imbalance

[Anonymous]

http://www.theglobeandmail.com/news/politics/ndp-eager-to-shed-big-spender-image-as-party-crafts-social-policies/article25588735/">http://www.theglobeandmail.com/news/pol ... e25588735/">http://www.theglobeandmail.com/news/politics/ndp-eager-to-shed-big-spender-image-as-party-crafts-social-policies/article25588735/

And they have constructed their major social-policy promises so the near-term price tag – for the four years of a government mandate – isn't huge.



The two biggest – uncapping health transfers to the provinces and a national child-care program – would cost about $3.5-billion a year in 2018-19. In federal budget terms, that's relatively modest, just more than 1 per cent of spending.



The problem is the costs of those commitments will spiral after that, so 10 years from now the additional cost will be $15-billion to $18-billion a year.



One reason the near-term costs are more affordable is that the NDP's child-care program would be phased in, so it wouldn't be universal for eight years. It will be expanded as Ottawa strikes agreements with the provinces, Mr. Mulcair has said. The NDP says it would cost $1.9-billion in 2018-19 but $5-billion in eight years.



But the bigger impact comes from the NDP's pledge to undo the planned tightening of federal health transfers.



Right now, Ottawa transfers $34-billion a year to the provinces for health care, and that amount goes up 6 per cent a year. Stephen Harper's Conservative government plans to slow down those increases so that after 2017 transfers will increase in line with nominal growth in the economy, which the Parliamentary Budget Officer estimates at 3.9 per cent a year.



The NDP promises to undo those "cuts" and keep the 6-per-cent annual increases.



That seems to match what the public wants. Polls place health care atop the list of public concerns and suggest Canadians would accept sacrifices to pay for it.



Costs are rising: Health care accounts for half of provincial program spending, and it's on track to grow at 6 or 7 per cent a year, says economist Don Drummond, the Matthews fellow in global public policy at Queen's University. Under the Conservatives' plan for health transfers, the federal share of health-care funding will fall dramatically, he noted. Ottawa would shrink its role in medicare – and its leverage to insist on national rules.



But there's a long-term fiscal problem with the NDP plan: Costs would accelerate quickly. If a major budget item grows much faster than the economy, it squeezes out other things. Ten years from now, NDP health transfers would be at least $10-billion more per year than the Conservative plan. Eventually, other things would have to be cut or taxes increased.



Mr. Drummond argues the public is probably willing to allow health care to crowd out some budget items, but 6-per-cent annual increases might be too much. He thinks it's possible to find reductions in health-care costs so they grow at a somewhat slower rate, so Ottawa might set transfer increases at 5 per cent.



For the NDP, the problem isn't just two promises, on child care and health care, that would grow in cost. They also favour other policies, like national pharmacare and undoing Mr. Harper's plan to raise Old Age Security eligibility from 65 to 67, which entail big, growing costs 10 or 15 years from now.



Now that Mr. Mulcair is on a roll, perhaps even the front-runner, his party still faces voters' concerns about how they'd spend – and they should be explaining not just how much they'd spend over four years, but the cost they'd commit to for the next decade.

[Romero]

Long term fiscal imbalance - eight years in a row of Conservative promises to balance the budget, eight years in a row of budget deficits.

[Anonymous]

Long term fiscal imbalance - eight years in a row of Conservative promises to balance the budget, eight years in a row of budget deficits.

Let's be fair here. The Conservatives have only had their own budgets since they won a majority in 2011 Which means every budget prior to 2012 had to be voted for by other parties. This government has been in office during the worst global economic meltdown since the the great depression. Financial stimulus and deficits are necessary under such volatile circumstances. A 300 billion dollar budget that produces only a billion dollar deficit is a technical blip that could be corrected. Remember, the USA has had consistent budget deficits for 14 years now and no plan to get out of it. Actually, they are expected to grow by the year 2020.



Back to Mulcair's plans. They are affordable in the short term, but they will not be over time. National pharmacare and undoing plans to raise Old Age Security eligibility from 65 to 67, 6-per-cent annual increases to health care and a child care program while keeping the Conservative enhanced child care benefit without raising our taxes? As these programs grow faster than the economy where will the money come from? Will we borrow it? Will they crowd out other programs? If we are going to embark on a continuous program of new and growing spending, I would like to know exactly how much it will cost and where we will get the money.

[Romero]

You can't blame Conservative budget deficits on other parties. As if the other parties would have refused to vote for surpluses. Can't blame it on a recession which is over, though it appears we may be headed back into one. Thanks, Harper!



What happened to all the surpluses we've been promised year after year? What happened to having one of the best economies in the world? Lies!



A national child care program can bring back more into the economy than what's spent. More parents in the workforce, child care creates jobs, higher productivity, it's a huge benefit for low income parents...

[Lance Leftardashian]

The west including Canada needs more government programs to counter the rising temptasians like the drug scene ,internet  etc.. I really believe that this election is really a toss up between Mulcair or Justin Trudeau. Canadians must finally put an end to the Harper government.

[Anonymous]

The west including Canada needs more government programs to counter the rising temptasians like the drug scene ,internet  etc.. I really believe that this election is really a toss up between Mulcair or Justin Trudeau. Canadians must finally put an end to the Harper government.

Temptasians Lance?



Are you trying to tempt me?

[Romero]

[Anonymous]

You can't blame Conservative budget deficits on other parties. As if the other parties would have refused to vote for surpluses. Can't blame it on a recession which is over, though it appears we may be headed back into one. Thanks, Harper!



What happened to all the surpluses we've been promised year after year? What happened to having one of the best economies in the world? Lies!



A national child care program can bring back more into the economy than what's spent. More parents in the workforce, child care creates jobs, higher productivity, it's a huge benefit for low income parents...

You have a short or rather selective memory. The DIppers/Grits and Bloc were prepared to pull the plug on the newly increased Tory minority if they did not spend more stimulus money. How much sooner would we have achieved a balanced budget had the coalition not forced the Tories to spend more? We are one ahead of many other countries in returning to balanced budget territory after the economic meltdown of 2008, but it could have happened sooner if the coalition had not demanded more spending.



Your assessment of national child care program is based on debunked editorials from the likes of Jim Stanford and Unifor. Families in the top 25 per cent of annual earnings are nearly twice as likely to have a child in Quebec's $7-a-day program, compared to families in the bottom quarter. In other words, the province is spending billions per year to make life easier for its wealthiest citizens. This makes no sense.



A study by economists at Université du Québec à Montréal concludes the daycare program "has not enhanced school readiness or early literacy skills in general, with negative significant effects" for certain cognitive tests. These negative results, the authors observe, are likely due to Quebec children spending too much time in daycare. Other studies have shown Quebec's program to be a source of greater stress and behavioural problems in children.



That aside, how much will it cost in the long run and will it add to debt and deficit levels as it has in Quebec? If you are saying Harper has spent too much money than why on earth would you be OK with Mulcair who wants to spend much, much more and he doesn't even know what the long term costs will be or where he'll get the money.

[Anonymous]

The NDP's approach to child care is entirely about winning at least 50 seats in Quebec that they will need if they are to form the next government.



I do support the government's current approach of balancing the budget in an economic slowdown. I know when they placed balancing the budget at the top of their priorities, we were were in much better shape. But, now that resources are taking a hit and having a negative impact on everything else, it is time to stimulate the economy and run a larger, temporary deficit. Labour and materials are cheaper in an economic downturn. Infrastructure investments produce greater immediate economic benefits than a social program or writing cheques.