Green Party Budget Merits an “F”

There is a little over three weeks to go to the election. Given the rush by all parties to get their election promises out, having a short election period may be a good thing. The costs of election promises of all parties are rising rapidly without much concern for their impact on the deficit. Not only should Canadians be concerned by this, but they should start thinking about which of these promises will end up in the “trash can” once a party is elected.

In the spirit of “accountability and transparency” all political parties agreed to have their election promises costed by the Parliamentary Budget Office (PBO). Each party was allocated a fixed amount of hours by the PBO for this exercise.

Given this time limitation the Liberals decided, that because of the complexity of some of their proposals, they would have the PBO cost only their “big ticket items”. The Liberals have provided PBO costing of their initiatives for 2020-21 to 2023-24, but detailed PBO estimates will not be provided until the full platform is released.

For the Conservatives, neither the PBO time constraint nor the complexities of their policy proposals were a problem, as the previous Harper government had originally introduced a number of their proposals. The Conservatives have provided PBO estimates for all initiatives announced to date. Recently the Green Party released the costs of their full platform, based on PBO estimates. To date, the NDP have provided PBO costs for only four initiatives.

The first leaders’ debate will take place on October 7th. For an informed debate, it would be helpful if all the parties released their fully costed platforms beforehand. Whether this will happen remains to be seen.

For the Liberals, the total cost of their promises so far is about $12 billion in 2023-24, and this does not include any cost for a pharmacare program. Using the most recent PBO fiscal forecast, this implies a deficit in 2023-24 of $23 billion. For the Conservatives, the corresponding numbers are $8.3 billion in promises, resulting in a deficit of $19.5 billion in 2023-24.

The Green party should receive full credit for being the first party to release a fully costed platform. But with hindsight they probably should have taken more time to make sure the numbers “add up” up and make sense. In their rush to get their costing out, they made a number of major “arithmetic” errors, which completely undermines the usefulness of their proposed budget plan.

The status quo fiscal projections presented in the Green policy document (p.2) are not those of the Parliamentary Budget Officer (PBO) released last June. The June forecast was used by the PBO to estimate the cost of the individual policy measures and should have been used as the base forecast by the Green Party. Nor is the Green Party’s status quo planning forecast consistent with the March 2019 Budget forecast. No explanation is given for not using the PBO forecast.

Perhaps even more problematic is the complete confusion in the Green Party’s presentation of spending and revenue estimates. For example, the fiscal tables in the Green policy document include detailed budget revenue and expense costing (by PBO) for each year – 2019-20 to 2023-24. However, there are calculation errors in adding up these costs.

For example, the aggregate net revenue cost for 2020-21 is $54.3 billion in the detailed revenue tables. However, adding up the costs associated with the individual measures results in a total net revenue cost of $56.1 billion, an understatement of $1.8 billion. This difference rises to $5.2 billion in 2024-25.

The costs of the spending proposals in the Green policy agenda are also misstated. The total in the detailed spending table is shown as $65.3 billion for 2019-20, compared to $73.3 billion when individual spending estimates are added up a difference of $8.1 billion. In addition, the total cost of the spending initiatives in the detailed tables is not the same as that used in the Budget Overview table (p.2).

For some strange reason the Overview Budget table shows the fiscal cost of their revenue proposals beginning in 2018-19, even though that year is already over. It appears that they have mistakenly allocated the revenue costs to the wrong years making their budget plan completely unusable.

It’s good to be the first Party to release a fully costed policy platform. Fiscal documents, however, should be prepared with great care if you want them to be credible and be taken seriously. The Green Party policy platform fails on both accounts.

It is hard to understand why the Green party adopted a balanced budget strategy over five years in their platform. No other party, including the Conservatives, will adopt an explicit deficit elimination strategy, because they know it isn’t necessary nor is it possible. The Green policy platform contains major spending and tax changes that if adopted would cause major economic and social dislocations over a long period of time. To adopt a balanced budget commitment in five years at the same time reveals a serious lack of understanding by the Greens of the potential impacts of their own policies.

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C. Scott Clark held a number of senior positions in the Canadian Government, including Deputy Minister of Finance from 1998-2001. He has a PhD in Economics from the University of California at Berkeley and is currently President of C. S. Clark Consulting.

From 1990 to 2005, Peter C. DeVries served as Director, Fiscal Policy Division, at the Department of Finance. In that capacity he was responsible for overall preparation of the federal budget. He is currently a consultant in fiscal policy and public management issues.

Their Blog is 3dpolicy.ca