Parliament’s budget watchdog is raising red flags over the lack of details in the Liberal government’s $100-billion stimulus plan, suggesting Finance Minister Chrystia Freeland’s phone is likely “ringing off the hook” from lobbyists wanting a piece of the action.
Freeland presented last month what the Liberals have described as a plan to help recover from the COVID-19 pandemic by opening the spending taps over the next three years to build a greener and more inclusive economy.
Parliamentary budget officer Yves Giroux says he is concerned by the lack of detail offered by the government on its plan, telling reporters during a briefing Thursday: “For an amount of that magnitude over three years, I've never seen that.
“And I'm surprised the government went for that because that exposes the government and the minister of finance to significant lobbying,” Giroux added. “I can only imagine how (Freeland’s) phone must be ringing off the hook.”
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.
