Economy

Spending to protect Canadians during the pandemic is the right thing to do, and Conservatives have supported it. But we can’t leave unsustainable debt for future generations.

Once the recovery starts, the Conservatives will get spending under control.

As Canadians are vaccinated and the economy re-opens, we will wind down emergency support programs responsibly.

We will ensure that stimulus measures are targeted and time-limited to avoid a structural de cit.

And we will get the economy growing again to secure the revenue needed to pay for the governmentservices Canadians depend on. Restoring Canada’s nances requires getting back to robust economicgrowth of 3% or more per year, which is the goal of our jobs plan.

The deficit soared to $354 billion in 2020-21, which seems daunting. But it’s much easier to develop a road back to balance when we consider the three components of the deficit:

  • $30 billion of pre-existing deficit: the amount by which spending exceeds revenues in a “normal” economy growing at 1.6%.
  • $70 billion from automatic stabilizers: government revenues dropped due to the recession,
    as companies and individuals see their income drop and therefore pay less tax. At the same time, government expenses for Employment Insurance and other social support programs
    have increased.
  • $250 billion in COVID-19 emergency spending: This includes $80 billion for CERB and
    $82.3 billion for the wage subsidy (CEWS), the GST and Canada Child Benefit top-ups, funding for provinces and healthcare and approximately 70 other spending measures.As we implement our jobs plan, we will get Canadians back to work, meaning lower unemployment and higher tax revenues for the government. As we do so, we will also wind down the emergency spending ina responsible way.

    Our plan for Secure Jobs and Economic Growth will therefore reduce the de cit by almost 90% by repairing the economy.

    There will be some costs along the way – incentives and other spending to get Canadians back to work. This spending is time-limited and designed to kickstart the economy. The highest level of spending willbe in year one, with spending on these stimulus measures winding down over ve years. This short-term spending represents most of the cost of our plan and will directly reduce the de cit by reversing theautomatic stabilizers.

A crucial part of our plan is a set of new investments in Research & Development, high-speed internet access, and tax measures such as the patent box. These will have long-term benefits to the economy, making us more competitive and generating more future tax revenues. That is why our priority is to get businesses rebuilt and investing again and get people back to work.

That’s the way to reduce the deficit.

The jobs and the economic recovery come rst and then the de cit will come down and the emergencyspending won’t be needed.

Because of the severity of the financial situation we face, we have limited the significant ongoing spending measures in our plan to a few critical priorities:

  • Healthcare: Boosting the rate of growth of health transfers to the provinces after the Trudeau government cut it.
  • Help for Seniors: Providing ongoing support to seniors to help them stay in their own homes orlive with their family members, to deal with the crisis in Long-Term Care.
  • Help for Working Families: Doubling the Canada Workers Benefit to make work pay and help those most in need.By limiting ongoing spending to a few key areas and increasing economic growth, we will eliminate thede cit within the next decade in a responsible way.

    As we do so, we will look for ways to achieve savings by making government more ef cient. For example,over the last year we have learned a lot about the ability of many jobs to be performed remotely. Leading Canadian companies like Shopify have announced plans to move to remote work being the default. Canada’s Conservatives will apply this policy to as many jobs in the federal public service as possible -reducing office expenses while improving quality of life by giving public servants in many roles the ability to choose to work from home. Flexible office space could allow public servants to work on-site when appropriate.

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