Economic policies can be best described as actions taken by the government of a country to influence the economy in a positive way. To achieve these goals, the government is charged with certain responsibilities, such as setting interest rates through the federal reserve, regulating the amount of money spent by the government, setting tax rates and creating private property rights (Von Mises 1995). In Canada, there are several political parties who have different beliefs about what exactly the economic policies should be. These political parties comprise a group of people who pursue common goals based on a common vision (Singh 1950).
Economic policies are amongst the many reasons a voter could be drawn towards a particular party. In Canada, the Conservatives, Liberal and New Democratic Party NDP are all tailoring their policies towards the centre of the political spectrum as this is where a high population of the Canadian voters lean towards. These policies are essential for a strong economy, the party in charge would seek to achieve certain goals through their policies such as stable prices, full employment and economic growth.
In this essay under the views of the Conservatives, Liberals and NDP’s, three economic policies namely; taxation, budget and trade policies would be highlighted. Utilizing my intensive research, I will then argue the that liberal party came out overall with the best economic policies during my chosen election period of 2015.
Stephen Harper of the conservatives came into power on the 22 of January 2006, the Canadian electorates voted to remove the liberal party from power and they were replaced by the conservatives party, this result signalled the end of the liberal rules which had lasted for almost a decade (D. Anderson & Laura 2010). The conservatives positioned the newly merged party closer to the centre of the political spectrum to enable them to appeal to the interest of the western base. The party promised increased spending on health care, reduction in GST, as well as initiated packages that were in response to the 2008-09 crisis. The conservative party asserted their competence in managing the economy and assured Canadians that a Harper-led party would be good for the economy in the long run, and they hoped that this would guarantee them the majority in 2011 election and beyond (Marland & Giasson 2015)
During the Harper era, there was a huge boom as prices of oil and other natural resources surged. Harper alone cannot take all accolades for the surge in prices but his insight allowed for Canadians to see a sustained, significant and broad-based increase in wages and incomes, as these had remained stagnant throughout the 1980s and 1990s (Gordon 2014).
Going into the 2015 elections, the Conservatives were the party in charge under the mandate of Prime minister Stephen Harper, opposing parties were the liberals led by Justin Trudeau and the NDP led by Tom Mulcair. During this period economies around the world were weak and although Canada ranked amongst the strongest, it was still fragile and desperately in need of protection against instability. Therefore, this election could not have come at a better time as it allowed for the citizens of Canada to choose a candidate that would have their best interest at heart, protecting the country’s economy and their jobs in the long run. During this period Canada’s economy was stagnant, mostly because natural resources have slumped, especially due to oil. Harper and Mulcair both planned to run a balanced budget, Trudeau, however, planned to run a modest deficit that would involve him spending on infrastructure projects that would be beneficial to the Canadian economy in the long run (Austen 2015).
The issue of taxation was discussed in great detail during the 2015 election. Taxation is a process by which government impose fees on citizens and corporate bodies to finance their expenditure (Fullarton 2003). To resolve this issue each party Is promising tax relief for the people of Canada but in various ways.
The conservatives offered a program called the family tax cut which was introduced by Stephen Harper, this allowed for families with children under the age of 18 years, to split up to 50 thousand dollars of their income for tax purposes, however, they had to cap the non-refundable benefit at 2 thousand dollars, they also offered a service that boosted the annual contribution for tax- free savings accounts (TFSAs) to double its previous value this saw the account rise from five thousand dollars to 10 thousand dollars, they had previously lowered tax rates to 15 per cent and they promised to reduce it even lower to 9 per cent from the current 11 per cent come 2019 a measure that they say would provide 2.7 billion in tax relief to about 700,000 small businesses, the party also hoped to roll out other incentives, including the permanent home renovation tax that would see 15 per cent of renovation tax between 1 thousand to 5 thousand dollars to be written off, the party also cooked up creative ideas to gain support such as 30 million dollar tax credits that was promised to the service club such as the rotary club, this would see them write off some of their membership costs (Hadekel 2015).
The NDP on the other hand look to oppose many of the conservatives initiatives as they believed that a lot of the conservatives ideas favoured only the wealthiest 15 per cent and their policies were just not working (Faille 2015). Firstly they would look to cancel out the incoming splitting plan offered by the conservatives arguing that it only favoured the wealthy people in Canada, the party would reverse the TFSA limits as they believed it did very little for the middle class, the NDP, however, increase income tax rate on Canada’s largest firms to seventeen per cent from the current fifteen per cent, the party believed that increasing taxes of these big corporation would degenerate 3.7 billion dollars annually, also cutting small businesses tax rate from the current 11 per cent to 9 per cent, as they believed that the small business was Canada’s real job creators and they are the ones that would kick-start the economy (poltext).
The liberals aim to give bigger breaks to the middle class, the liberal party believes that a strong economy begins with a sturdy middle class. Their plan was to help those already in and on their way into the middle class, this is because they felt with more money the middle class would save and invest, this would lead to economic growth (poltext). The liberal government seeks to help the middle class by cutting their income bracket from the current 22 percent to 20.5 this tax cut would apply to anyone with a yearly earning between 44,701 and 89, 401 and this would generate 3 billion per year (Puzic 2015). This would then lead to an increase in the upper class’s taxes by imposing 33 per cent on earnings that are above 200 thousand dollars, the party like the NDP would look to cancel the conservatives income splitting plan for families, Trudeau believe it is a form of tax break for the richer 15 per cent, it would also seek to cancel out the 10 thousand dollar TFSA, the liberal party would keep the corporate tax at 15 per cent. The party supports the lowering of business taxes to 9 per cent, the leader of the party Justin Trudeau, however, wants to make sure that this reduction doesn’t favour the wealthy Canadians as he believes they use small businesses as a means of avoiding taxes (Hadekel 2018).
Therefore In the 2015 elections, the parties had different views of focus, Conservatives focused mainly on tax cuts and credits, The NDP focused mostly on taking big shots at the large corporations, and the Liberals would give breaks to the middle class while increasing the taxes of the upper class.
After a government decides the mode by which it would generate revenue it has to ensure that the countries expenses do not exceed revenues, this is referred to as a balanced budget, a well-planned balance budget demonstrates the fiscal health, showing spending that remains in line with cost (Magill 1952).
Prior to the election, the conservatives had balanced the books a year ahead of schedule, indicating a 1.9 billion dollar surplus 2014-2015 fiscal year. The April budget presented by the Conservatives projected a balanced budget over the next few years, however, these projections were contingent on higher oil prices and economic growth, the conservatives also implemented a bill that ensured that federal government balanced the books each year, except if there was an extraordinary situation (Faille 2015).
Mulcair NDP promised that if the NDP was to win they would balance the books for the next four years, beginning with 2016-17 fiscal year, the party also looked to hike up corporate taxes and cancel out the conservatives spending initiatives like income splitting, the NDP believed these strategic moves could be what leads the Canadian economy to a balanced budget (Faille 2015).
The liberals, however, chose to go against the grain with their leader Justin Trudeau arguing that this a perfect time to invest in Canada’s future as interests rates are currently low, taking a political gamble that would see them run a red ink, Trudeaus thinking went in line with the Keynesian principle where he believed that the boom, not the slump Is the right time for austerity at the treasury”, research carried out by the Roosevelt Institute showed that when a country cut in a slump, it often led to lower growth and higher GDP ratios (Jayadev & Konczal 2010).
The liberal party had plans to axe the balanced budget allowing deficits for a three year period this would then allow for investments in infrastructure such as roads, transits and bridges which would run them a cost totalling 25 billion dollars (Faille 2015). However, they believe that this gamble would help spur up the Canadian economy in the long run, the liberal party believe that we have been dealing with slow global growth for years, which no foreseen end in coming years, so we should be looking for different methods to stimulate the economy, this liberal program would see federal spending double across a span of 10 years to a staggering 125 billion dollars (Hadekel 2018).
During the election process, there was a debate held between the three main party leaders which the global mail called “the most critical-ballot box issue facing Canadian voters in the upcoming federal election.” Marguerite Mendell, director of Concordia was asked several questions about the debate, when it came it came to balanced budget, Mendell said she believes that the current state of the balanced budget in Canada would lead people astray, she went on to say that after the vision for Canada had been laid, the government had to provide the adequate policy tools and measures that would allow for the country economy to get where it belongs (Latimer 2015).
In terms of budget, the conservatives and NDP have similar ideologies as they believe that running a balanced budget is best for the country’s economy, the liberals, however, are taking a gamble that could see a deficit for a couple years but this would help spur up the sluggish economy in the long run.
Trade policies determine standards, rules and regulations that pertain to trade between countries, it involves the supply for productive factors, preferences and technologies for producing goods that can be traded on world markets (Clarida and Findlay 1992), it is a contractual arrangement between states concerning their trade relationships. Trade is essential as it an international transformation of commodities, inputs and technology which allows for welfare. Foreign trade allows for expansion of markets beyond national frontier (Vijayasri 2013).
In the 2015 election, the Trans-pacific partnership is an issue that was touched on, it is an agreement between 12 pacific rim nations that cover almost 40 per cent of the global economy, making it one of the largest trading bloc in the world (Faille 2015).
The conservatives throughout their campaign continued Trans-pacific partnership negation and agreed to limit concessions in some sensitive areas, these areas included the countries automobile industry and supply-managed dairy and poultry sectors, this agreement would involve the Canadian government paying poultry farmers 4.3 billion dollars over a span of 15 years to protect them from making a loss that could result from an increase in duty free imports of foreign products, the auto sector would also be presented with more limited funding. Harper believes that the deal would give Canadian producers tariff-free access to Japan which is the world’s third-largest economy and that would then create more jobs within the country (Kesteler-d’amours 2015).
The NDP was not impressed by the Transpacific Partnership trade pact that had been signed during the election stating that Prime Minister Stephen Harper is overstepping his power ignoring the people of Canada, the leader of the NDP sent a message to Harper’s trade minister stating that he would not be bound to any agreements made during the TTP talks on October 19 2015, Harper believed that the agreement could put thousands of Canadians jobs and communities in peril (Vaughan 2015) . Mulcair said “ he would not be bound by the TTP agreement an wouldn’t implement the deal, insisting Harper “sold out” Canada’s auto sector and dairy farmers” (Faille 2015). However, the NDP is not afraid of foreign investment but for any foreign deals to happen they believed that the deals must favour Canadian jobs, the NDP would be looking to strengthen the Investment Canada Act to ensure that Canadian jobs are protected and that deals provide a net benefit for middle-class Canadian families (poltextndp).
The liberals have always been pro-trade so it comes to no surprise that they admit that they believe in the agreement and would support it. However, Trudeau says a liberal government would scrutinize the TTP deal (Faille 2015). For decades the conservatives have held an increasingly partisan and hostile position when dealing with our closest neighbours, Trudeau hopes to end this antagonism and work with other countries for shared interests. Canada relies heavily on international trade to create jobs and for the growth of the economy(poltext).
Trudeau strongly believes that the trade agreement would open markets to Canadian good and services, grow Canadian businesses, create jobs and provide lower prices and choice to Canadian consumers (Ezez. 2018). Trade is vital for Canadian economies growth, trade opens markets, grows Canadian businesses, and creates jobs for the middle class. Trade would bring in jobs that would pay wages that are 50 per cent higher than industries that are not export intensive(poltext), This goes in hand with liberals main principles as the middle class would be enriched and it would be good for Canada as a whole.
Days before the federal election the Privy council of Canada (PCO), which is the department that offers non-partisan support to prime minister and cabinet, the PCO invited both the Liberal and NDP leader to a confidential meeting concerning details of the Trans-pacific partnership trade agreement, both parties declined the invite stating that the meeting was last minute and it also left Canadian in the dark. The NDP leader was not interested in the agreement he said that he refused the deal because the government was prohibited from revealing the deals of the trade agreement to Canadians, he also called upon Stephen Harper the leader of the liberal party to release details of the TTP before the elections to enable Canadians to vote accordingly (Barton & Lunn 2015).
Canada’s would definitely continue under the Trans-pacific partnership if the conservatives were to remain in power, the liberals are also in favour of the agreement being pro-trade, however, the NDP weren’t fans of this deal as they felt it didn’t favour certain Canadians and would they would pull Canada out of the trade agreement.
One of the strongest ways for a party to retain power is for them to ensure that the Canadian populace is very pleased with their economic policies, as this ensures the essential welfare of the country. In last three elections the conservatives held a good position going into the race, however, the 2015 election was a bit different as the conservatives had shown signs of weakness and now it was time for someone to capitalize on these cracks. It is now time for a more skilful and pragmatic politician to be given a chance, a Candidate that is not afraid to take risks, someone who understand the fundamental elements of Canadian politics and society and can adapt to unforeseen challenges.
If I was granted the opportunity to vote in the 2015 election I would have voted for Justin Trudeau, I strongly agree with his views for uplifting the middle class, overall growth for the economy and forward-thinking views on international trade in this era of globalization. Trudeau’s and the Liberals parties views towards the three issues previously discussed in the essay can possibly take the Canadian economy to where it needs to be, the parties mandate go in line with principles that have been proven over time, Trudeau believes in spending during booms and this goes in line with Maynard Keynes principle, the Liberals strongly believed that this age of globalization of trade is one of the major factors that countries can benefit and capitalize on, as it allows them access to good and services they have limited or no access to within their borders.
Trudeau cared immensely for the middle class, one of his plans was for economic security for the middle class, the liberal party believed that a strong middle class was the bedrock for a great economy, the Liberals believed that with more money in their pockets the middle class would have more money to save and invest this would help grow the economy and this would beneficial for everyone in the long run, they’ll be hoping to achieve this through tax breaks that favour the middle class, creating more jobs for Canadians, and ensuring Canadians have secure retirement (poltext).
Canada enjoyed a perfect credit rating during Stephen Harpers era as prime minister, the country during that period curbed the deficit and continued to benefit from the commodities export boom after the deficits during the great recession. Canada then began to return to a budget surplus, Trudeau, however, wanted to push for huge spending that would see the economy run at a deficit, this move was one that was very good for the economy’s growth, these principles that Trudeau was adopting fell in line with that of Keynesian economic policy, Maynard Keynes wrote in the year 1937 “the boom, not the slump Is the right time for austerity at the treasury” (Jayadev & Konczal 2010).
Trade is vital for economic growth, there is always a strong need for foreign trade in this era of globalization, this is because countries have different capabilities and each country specialize in producing different commodities, to compensate for good they can produce or have a shortage of, this is why it is then important for them to involve in trade with other countries (Vijayasri 2013). International trade goes in lines with the theory of comparative advantage, Charles Kindleberger during one of his many lectures argues that the two go hand in hand in his teaching on “Government and international trade” he discusses the important role of a governments work in international trade (Clarida and Findlay 1992).
Stephen Harper’s approach towards trade has failed, under the conservatives, Canadian recorded the largest deficit in Canadian history, and Canadians are paying for the is with lost jobs. Harper does sign trade deals however the trade deals are never negotiated or implemented the right way, The liberal party, hopes to open up the Canadian borders to trade that would benefit the middle class, by bringing in jobs, carefully considering all trade opportunities open to the Canadian economy, and also involving trade with emerging markets and other established markets, including India and China (poltext).
Two years into Trudeau tenure in office, the Canadian economy had created 400,000 new jobs, the Liberals had promised to run a deficit of 10 billion dollars through their first three years, the instead federal government ended the 2016-2017 fiscal year with a deficit of 17.8-billion dollars (Aiello 2017)
To conclude, this essay I analyze three economic policies; taxation, budget and trade policies from the view of the Conservatives who were led by Stephen Harper, Liberal-led Justin Trudeau and NDP led by Tom Mulcair, the essay looks in depth into the different politician's policies and then pitches them against each other. Going into the 2015 election the Harper Conservatives were are at the helm of power, having won previous elections, the Canadians had started to see cracks in the walls as some of their policies no longer looked interesting. It was now time for someone new to take over an lead the country in the way that would be beneficial to all Canadians, Old and young and after intensive research of all candidates participating in the 2015 election, Justin Trudeau was the one that stood out to me, his ideas of running a deficit during times of austerity, was one that could definitely steer the ship that is the Canadian economy forward. The Liberal party are pro-trade, this is good for the Canadian market as it expands the market, it bring goods and service that are not present in the Canadian market into the country and lastly it creates jobs, if I was given a chance to participate in the voting process during the 2015 election I would have endorsed the liberal candidate Justin Trudeau.