Canada's Liberals take gamble, propose deficits to boost growth

By David Ljunggren
OTTAWA, Aug 27 (Reuters) - Canada's opposition Liberals,
trying to kick-start a sluggish election campaign, on Thursday
took a political gamble by proposing to run budget deficits to
help finance a major national infrastructure program.
The Liberals are now the only party to suggest going into
the red to help stimulate the economy. They trail the ruling
Conservatives and front-running New Democrats, who are both
promising to balance the budget.
Prime Minister Stephen Harper - running mainly on his
economic record ahead of the Oct 19 federal vote - says deficit
spending would be disastrous.
Liberal leader Justin Trudeau said low interest rates and
Canada's favorable debt-to-GDP ratio meant now was the time to
pour money into public transit as well as social infrastructure
and green projects.
"These investments have been put off for far too long. They
are vital if we want to grow the economy," he told a news
conference in Oakville, Ontario, saying the plan would create
"many jobs across the country."
The plan would almost double federal infrastructure
investment to nearly C$125 billion ($95 billion) over the next
10 years. This would mean running deficits of less than C$10
billion in each of the 2016 and 2017 fiscal years.
The deficit would shrink in 2018 before the budget returned
to balance in 2019. Trudeau also committed to establishing a
Canada Infrastructure Bank to provide low-cost financing
to build new infrastructure projects.
Harper, seeking a rare fourth consecutive term in power,
told reporters that Trudeau "has no idea what he is talking
about" when it came to budgets.
"That's why you could be sure his small deficits will become
large deficits," he said, predicting the Liberal plans would
result in higher taxes and job losses.
The Conservatives, who have run seven consecutive budget
deficits in the wake of the 2008 recession, are promising a
surplus in the 2015/16 fiscal year.
A Nanos poll for CTV and the Globe and Mail on Thursday
showed 54 per cent of Canadians backed a new round of deficit
spending by the government to stimulate the economy.
The left-leaning New Democrats have traditionally favored
government investment but leader Thomas Mulcair, asked about the
Liberal plan, said he was tired of watching governments put debt
on the backs of future generations.
Polls suggest the Conservatives will lose their majority in
the House of Commons and could even be turfed from office.
($1=$1.32 Canadian)