OTTAWA—Can the Conservatives have their budgetary cake and eat it too?

Over the first two weeks of the federal election campaign, Andrew Scheer has announced tax cuts that would blow a $2 billion hole in a prospective Conservative governments’ first budget in 2020.

While that would be partially covered by a $1.5 billion cut in unspecified federal support for corporations, the Conservatives have so far provided few hints on how they would make good on Scheer’s pledge to balance the budget within five years.

A Star analysis of the Conservatives’ campaign promises so far — on top of the baseline projections prepared by the independent Parliamentary Budget Office (PBO) — would result in a deficit of $24.3 billion in 2020-21. That’s in the absence of new spending or spending restraints the Conservatives could promise in the remaining 30 days of the election campaign.

Based on what the Conservatives have announced, the deficit would be $16.5 billion in 2024-25 — the year Scheer has suggested he’d balance the books.

(This analysis is only possible because the Conservative campaign has allowed the PBO to provide a cost analysis for every announcement they’ve made so far.)

“It looks like there’s a race to the bottom in the sense that (the Liberals and Conservatives) want to compete with each other about who is going to add more tax cuts and who is going to add more spending,” said Mostafa Askari, chief economist at the University of Ottawa’s Institute of Fiscal Studies and Democracy.

“To me, this would be irresponsible. The least they can do, the least anchor, is the declining debt-to-GDP ratio. Even if you don’t have a balanced budget target … at least you have to show a decline in debt-to-GDP ratio,” referring to the fiscal goal the Liberals set for themselves during their first term.

“From what I have seen so far, they need to take really drastic action to come to a point where they can actually show a declining debt-to-GDP ratio.”

The Conservative campaign was provided a copy of the Star’s analysis and a list of detailed questions about how they’d balance the books if they form government after the Oct. 21 vote. In response, Conservative spokesperson Simon Jefferies said that they will be unveiling their fully-costed platform later in the election campaign, and that it will “show a path” to balance within five years.

In a speech to the Economic Club of Canada earlier this year, Scheer suggested a Conservative government would not cut federal spending — only limit its growth — in their quest to put Ottawa back in the black.

“As my dad used to say, life is about choices. You can’t have it all. But if you’re smart, you can have it pretty good,” Scheer said.

“Drastic spending cuts aren’t necessary to balance the budget. Simply taking a responsible, measured approach to spending growth will go a long way. And that is what I will do.”

And it’s safe to assume Scheer would not propose any tax hikes after spending the last two years promising Canadians lower taxes as a central part of his pitch since becoming the Conservatives’ leader in 2017.

In the absence of spending cuts or tax increases, it is not clear how the Conservatives could balance the books. Jack Mintz, a senior fellow at the School of Public Policy at the University of Calgary, said he would not pass judgment on the Conservatives’ plans until he’s seen the full platform

But Mintz, who worked at the Department of Finance during Liberal cuts in the 1990s, said that there are cuts in government spending that can be made without hurting services Canadians depend on.

“There’s some programs that don’t work very well that could be cut, because they’re not effective,” said Mintz in an interview Friday.

“There’s a lot of things that can be done in terms of, to give an example, procurement costs. You’re not hurting services but what you’re doing is you’re running the government a lot better than in the past.”

Across-the-board spending cuts were tried by the Conservative party the last time they were in power in Ottawa through the Deficit Reduction Action Plan (DRAP).

The initiative, which was met with protests from public sector unions, resulted in savings of roughly $5.2 billion per year, according to Treasury Board figures released under the Liberal government.

The resulting cuts in services, however, were never officially accounted for. According to government estimates in 2014 reported by the Ottawa Citizen, some 35,000 public servants were cut as a result of Conservatives’ spending restraints.

But an analysis by the Institute of Fiscal Studies and Democracy, headed by former Parliamentary Budget Officer Kevin Page, tied a number of service cuts to DRAP — including the closure of veterans’ services offices, a drastic decrease in the number of government offices handling employment insurance claims, and cuts to border security.

Even if the Conservatives were to propose a similar exercise as part of their pitch to Canadians this October, the savings realized under DRAP wouldn’t cover the tax cuts they’ve already promised.

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Page noted that the Conservative planned cut to personal income taxes would cost the government roughly $6 billion by 2024-25.

“OK, $6 billion in perspective … that’s like two good-sized (government) departments,” Page said.

“So to say that all you’re going to do is tweak the spending and somehow $6 billion comes out the other side, well actually you could wipe out two federal departments to get that kind of spending.”

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