MNI INTERVIEW: Poilievre Austerity Promise At Risk- Ex PM Aide
MNI (OTTAWA) - Conservative leader Pierre Poilievre’s desire to pursue fiscal austerity will face challenges from Liberal deficit spending ahead of this year’s election, the need for economic support in a trade war and the danger of giving an opening to challenger Mark Carney, an adviser to former prime ministers told MNI.
Geoff Norquay, who advised Brian Mulroney and Stephen Harper, says Poilievre's ambitions to cut spending to balance the budget while keeping taxes low will be undermined by an increasingly difficult starting point. Norquay pointed to tens of billions of dollars of commitments Justin Trudeau has made since December when Chrystia Freeland quit rather than introduce a fiscal update pushing the deficit to CAD60 billion instead of her earlier CAD40 billion cap.
“You need to start with a very clear understanding of what the current situation is -- at the current time that is virtually impossible to do unless you’re inside government,” said Norquay, now with Earnscliffe Strategies. “By all accounts, the situation is God awful.”
"Fix the budget" is one of Poilievre's key pledges alongside measures to fight inflation like ending a carbon tax, though he says the details won't be revealed until an election is called. Conservatives likely need to promise more than Liberal leadership candidate Mark Carney's pledge to balance the operating budget within three years. Norquay said Poilievre showing his hand too early risks a repeat of 2015 when Trudeau saw his rivals make fiscal promises early and then won over voters with his own distinct pledge for modest deficits.
Poilievre, like past opposition leaders, is facing pressure to put out a platform early, Norquay said. The wisdom of waiting has been demonstrated by how much things have changed because of Donald Trump's threats of tariffs and economic domination, he said. “It is way smarter, particularly given the risks and uncertainties right now, to keep the powder dry.” (See: MNI INTERVIEW: Long-Term Trump Tariff Is Biggest Canada Risk)
TRADE PRESSURES
Most federal leaders including Carney and Poilievre are pledging retaliatory tariffs and support for workers hurt in a trade war, making it harder for Conservatives to stand out on the economy, Norquay said.
This also puts another layer of spending and economic weakness in the way of fiscal austerity, he said. Current Bank Governor Tiff Macklem says a trade war could stall growth for two years while feeding new inflation pressure. Macklem has also signaled fiscal policy must take a greater role in a trade war as he keeps a lid on inflation.
“The risk in retaliation is that Canada spends itself to death, and it cannot do that,” Norquay said. “Given the relative size of the economy of Canada to the Americans, it’s very difficult.” (See: MNI: Canada Tariff Retaliation Seen Limited By Domestic Pain)
Poilievre will have more success amid the U.S. tensions with his pledge to speed up major resource projects and cut red tape faced by companies and workers, but those are longer-term solutions, Norquay said.
“It is clear that the Trump tariff crisis has changed a lot of minds,” Norquay said. “Resource development, infrastructure development, is going to change rapidly.”