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

Thu Aug 27, 2015 12:51pm EDT
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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.   Continued...