Is the NDP’s election platform a “pipe-dream”?

Earlier today, an opinion piece was published in the National Post by Adam Zivo. In the piece, Zivo claims that the NDP’s proposals for “increases in public spending that would be paid for by higher taxes on the rich” are extravagant and likely to prove difficult to fund given the NDP’s current commitments on taxation. This is not true.  

Zivo begins by critiquing the NDP housing plan to create 500,000 affordable housing units by comparing it to an existing Liberal policy that allocated $1.5 billion to create 4,500 housing units. Zivo uses the subsidy level of the Liberal policy, around $330,000 per unit, to suggest that the NDP policy will come in at $165 billion dollars (expressed by the author as half the current annual federal budget). 

The obvious difference here is that the Liberal plan is a directly-funded housing subsidy program, whereas the NDP plan contains an unspecified mix of subsidies, tax breaks, and changes to existing housing regulations. To extrapolate figures from the Liberal plan is misleading as the NDP program also contains non-spending mechanisms intended to spur housing creation.

Still, let’s assume that the figures are comparable and that the NDP program would require a similar level of subsidy to operate effectively. The NDP proposal suggests implementing this program over a period of ten years, which would require a subsidy of around $17 billion per year, or only about 2.1% of 2019 total Canadian government spending. 

Zivo continues by complaining that a guaranteed income project proposed by the NDP would cost too much, using Parliamentary Budget Officer scoring of a different program implemented by the Ontario Liberals as a reference. According to the PBO, this program, based on a pilot project implemented by the Ontario Liberals, would cost between $30 billion and $71 billion in its first six months of operation. 

The problem is that this is not the NDP’s plan. The NDP does not propose the creation of a specific guaranteed income policy. Instead, they advocate expanding “all income security programs to ensure everyone in Canada has access to a guaranteed livable basic income”. This is basic multiprogram welfare state expansion and not really a basic income scheme and is not accompanied by a timeline. Presumably, this is a longer term goal and not something related to immediate NDP spending plans. 

The remaining programs raised in the article include a national pharmacare program and doubling of annual student grants, which according to existing government figures and NDP estimates would cost around $12 billion per year. If you assume that the subsidy figures for the NDP housing program are comparable to the existing Liberal program, the total cost of these programs would be around $29 billion per year, requiring an increase in Canadian government spending (around $799 billion in 2019) of about 3.6% relative to existing spending, or about 1.5% of GDP. 

This would still leave Canada’s spending well below the spending of most western European states. Canada is remarkably stingy relative to virtually all other wealthy countries, especially those located in northern Europe. Canada could easily afford to bear these expenses (and much more), and the tens of billions likely to be raised by the NDP’s tax commitments would be able to cover these additional expenditures. 

This is further complicated by the fact that much of the spending incurred by the NDP is just shifting around existing spending that already takes place. We already spend billions of dollars in Canada each year on pharmaceuticals, for instance. The NDP just proposes we move this spending from being mostly “private” to mostly “public” by increasing taxes and eliminating private sector insurance bureaucracy. A similar amount of spending is occurring and the same goods are being purchased, but the spending is notionally grouped under a different heading than before.

There are of course other NDP election proposals that are not discussed in the piece that still carry a financial outlay. The headline policies however are not especially costly and much of the remainder is more administrative in nature and relatively cheap. 

Zivo’s handwringing over the supposed “luxurious, unaffordable promises” of the NDP doesn’t hold water. In reality, the NDP is a moderate party with somewhat modest short-term goals, especially considering economic policy in other developed countries.