Trudeau Mum on Running Deficits as Oliver Slams Liberal Economic Policy

January 22, 2015 Updated: January 22, 2015

LONDON, Ont.—Liberal Leader Justin Trudeau is taking flack from Finance Minister Joe Oliver over economic policies discussed at the party’s caucus meeting in London, Ontario, but Trudeau has his own criticism of the Conservative government’s plans.

Trudeau won’t say if he thinks the federal government should abandon its commitment to a balanced budget given the economic turmoil caused by plunging oil prices.

Finance Minister Joe Oliver says the Liberal leader’s economic plans would raise taxes and kill the economy.

“Justin Trudeau’s high-tax, high-debt agenda would hurt the Canadian economy and kill Canadian jobs,” said Oliver in a statement.

Trudeau said the Bank of Canada’s surprise interest rate cut Wednesday is further proof that Prime Minister Stephen Harper’s government is on the wrong economic track.

We need to make sure that the government’s priority is on creating growth and jobs for the middle class.
— Liberal Leader Justin Trudeau

The Harper government has delayed its budget release by two months to give it time to factor in plummeting oil prices and what impact these could have on the economy.

Trudeau said the government’s priority should be on spurring economic growth and creating jobs—not delivering a $2.4 billion tax cut to the country’s wealthiest families.

Oliver said the Conservative government has the best job creation track record in the G7, dismissing Liberal economic policy. Oliver said Trudeau would drastically raise taxes and ignore the needs of Canada’s manufacturing sector “and the hundreds of thousands of workers who depend on it for their livelihood.”

The Conservatives have made a pivot in recent weeks, touting investments in manufacturing in the face of layoffs in Alberta’s oilsands. While the price of oil is expected to hurt the Canadian company overall, manufacturing could benefit as energy prices fall, along with the Canadian dollar, making Canadian-made exports more attractive in foreign markets.

Some economists say the Conservative government should be investing in things like infrastructure to encourage growth and give up its fixation on balancing the 2015-16 budget after six years of deficits.

But Trudeau wouldn’t go that far.

He dodged repeatedly when asked whether he believes it would be wise to continue running a small deficit until the economy stabilizes.

“I think one of the things Canadians expect of their governments is to be fiscally responsible,” Trudeau said as he wrapped up a two-day Liberal caucus retreat.

“It’s not particularly fiscally responsible to put all your eggs in the same basket, to pin all your hopes on oil prices remaining high and, when they fall, being forced to make it up as they go along.”

The Conservative government’s recently announced plan to allow couples with young children to split their income for tax purposes—at a cost to the federal treasury of $2.4 billion a year—is poor fiscal policy, he said.

Trudeau indicated his first line of attack would be to scrap the income splitting scheme, rather than run a deficit.

“We need to make sure that the government’s priority is on creating growth and jobs for the middle class,” he said.

Oliver has said that is all the government is focused on, describing the government’s “relentless action” to cut taxes and grow the economy.

Liberal finance critic Scott Brison said the Conservative pledge to balance the budget in the coming year is “a political imperative, not an economic one.”

“It’s pure politics,” he said in an interview.

However, Brison also wouldn’t say whether a Liberal government would be prepared to run a deficit.

He said there are a number of things a government could do to stimulate growth without impacting its balance sheet. For example, he said the government could partner with pension funds to invest in infrastructure.

With files from The Canadian Press

This article was corrected from an earlier version that misnamed Finance Minster Joe Oliver.