PAYING FOR NEW CONSERVATIVE ELECTION PROMISSES
Although most of the Conservative election platform was set out last October with the introduction of the increases to the Universal Child Care Benefit and the Family Tax Cut, Stephen Harper has announced two new initiatives in the first two days of the 2015 election campaign. At this rate with 75 more days to go, Canadians could be bombarded with new promises before October 19th.
The two initiatives – changes to the Apprenticeship Job Creation Tax Credit and a permanent Home Renovation Tax Credit - were aimed at the business sector and expected to spur economic growth. The Home Renovation Tax Credit will only come into effect in the middle of the next mandate (assuming the Conservatives are re-elected) and only if the fiscal situation can afford it. Although Harper has acknowledged that the current economic environment is weak, these two initiatives will do nothing to stimulate the economy. In fact, they could have the opposite effect if homeowners decide to delay their renovations until this measure comes into effect – at least two years from now. In the interim, economic growth may be slower than it otherwise would have been. Somehow Mr. Harper has got his economics backwards. If he truly felt that this measure would stimulate economic growth, he would have announced it before calling the election and putting it in effect right away. This is what he did last October, in advance of the economic update and budget.
By delaying this measure until the fiscal situation can afford it, he is also indicating that the fiscal situation is somewhat precarious and that there is little or no funding available over the short term for new initiatives. This is contrary to his claim that there will be a surplus this year and in the years to come.
The total cost of these two initiatives would be about $1.6 billion annually, when fully in place. The Apprenticeship Job Creation Tax Credit is estimated to cost $60 million per year. It is assumed that this would be put into effect with the first budget after the election, assuming the Conservatives are re-elected. We have assumed that the Home Renovation Tax Credit will be put in place in 2018. These two measures will have a marginal impact on 2015-16, $60 million in 2016-17, about $440 million in 2017-18 and $1.6 billion ongoing. This means that any further announcements will also have to be back end loaded and depend on “if funding is available”. In other words, promise as much as you want as long as you leave yourself enough “weasel words” to get out of them.