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Business Commentary Scheer’s Conservatives seem to think budgets can balance themselves, too

For the past five years, when Conservative politicians have wanted to mock Liberals’ credentials for managing the public purse strings, they have routinely cited Justin Trudeau’s infamous 2014 quote: “The budget will balance itself.”

Odd, then, to see the country’s Conservative leaders now embracing the Trudeau philosophy in their own fiscal plans.

Despite what some of Mr. Trudeau’s political opponents have suggested, his comment (and his regrettable choice of phrasing) never meant that some budget fairy would swoop down and sprinkle its fiscal pixie dust and the government would wake up with a balanced budget under its pillow. What he referred to was the belief that a government could essentially grow its way out of a budget deficit – relying on a stronger economy to lift the revenue side of the equation. He was saying that if you focus policy on growing the economy, you don’t have to slash spending or raise taxes to return to balance.

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Andrew Scheer, apparently, agrees.

The federal Conservative leader, in two economic policy speeches last month, talked about a need to “phase out” the budget deficit – gradually, over roughly five years. He talked about doing so by moderating spending growth, dismissing as “fear mongering” the Liberal warnings that he would slash program spending. He talked about tax cuts that would stimulate business and put more disposable income in the pockets of Canadians.

If you’re not going to cut program spending, and you’re not going to raise taxes, then you’re talking about relying on your revenues to naturally outpace your expenditures in order to organically shrink your deficit. You are, in effect, expecting the budget to balance itself.

Mr. Scheer is not alone. This week, the Fraser Institute – a right-leaning economic think tank – issued a paper critical of Ontario Premier Doug Ford’s new Progressive Conservative government for pursuing a “gradualist” deficit-reduction plan that relies largely on growing revenues to evaporate the red ink. The report concludes that the Ford fiscal management strategy is, in most key respects, remarkably similar to that of the province’s previous Liberal government – despite Mr. Ford’s tough talk about cleaning up the financial mess left by his predecessors.

This appears to be the new message among Canada’s Conservative political leaders – a soft brand of fiscal conservatism that aims to appeal to a broader range of voters. If you can pledge to get rid of the previous government’s deficits by eliminating waste and minding the store more carefully, without inflicting a great deal of pain, that’s a lot more palatable than telling people that, due to budget constraints, you are going to deliver less to them than your predecessor did.

But in soothing the public’s fears that heartless Conservative budget zealots will take sharp knives to key government programs, these leaders on the country’s political right are losing sight of the very reason they are so committed to fiscal restraint in the first place. It’s not just about making sure the spending and revenue lines match up. It’s about a belief that smaller government is better government. That was a belief at the core of the Conservative governments of Stephen Harper, and it’s a belief that remains a key part of Canadian Conservative political philosophy.

Mr. Scheer certainly talks the talk. As he put it in a recent speech in Vancouver, he believes in “a country where taxes are low, government is limited, but potential is unlimited.”

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Yet, his fiscal management plan would do little to undo the growth in the government’s economic footprint that has taken place under Mr. Trudeau. Federal program spending is now 14.4 per cent of gross domestic product, up from 13 per cent when Mr. Trudeau took office, as the Liberals have expanded programs, introduced new ones and dramatically increased federal infrastructure commitments. Mr. Scheer’s plan does nothing to address this structural growth in government that he says he fundamentally opposes. It does nothing to create fiscal space for the government to meaningfully reduce its revenue take, to put more back in voters’ pockets.

The same goes for Mr. Ford in Ontario, who so far has shown only a limited and highly selective taste for reversing the government growth under his predecessors. The Fraser Institute argues that without deeper fiscal reforms, the government will fall short of delivering the kinds of tax breaks needed to stimulate business and boost the province’s economic potential.

In fact, these leaders are not offering a meaningful fiscal alternative – just a fine-tuning of the status quo. It may win over some voters. But if you’re looking for a commitment to true fiscal conservatism, you won’t find it here.

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