Political strategists say that Finance Minister Bill Morneau will need to lower expectations as he crosses the country during his pre-budget consultation tour, and one says the economy is so bad he might consider hiking the GST.
Greg Weston of Nanos Research told CTV Power Play that the pre-budget tour could be called the 鈥渆mpty cupboard tour鈥� because 鈥渢here鈥檚 no money.鈥�
Weston added that, 鈥渢he volume of promises vastly exceeds the government鈥檚 ability to pay for it,鈥� even when taking into account the up-to $10-billion annual deficits proposed during the election campaign.
Morneau told an audience at the Halifax Chamber of Commerce Monday that falling oil prices mean the government is now projecting a $15 billion per year drop in GDP starting this year, compared to what was projected in the last budget.
Morneau called the fiscal situation an 鈥渦phill battle,鈥� although he said Canada is 鈥渇acing these challenges from a position of strength.鈥�
Morneau also said he 鈥渃onfident and optimistic鈥� that the Liberal plan of tax cuts for the middle class and infrastructure spending will create long-term growth and in turn encourage Canadian businesses to hire people.
鈥淲e have a clear-eyed view of what things look like right now and we believe making investments will make a real difference,鈥� Morneau told reporters after his speech.
Morneau also reiterated, in response to a reporter鈥檚 question, that the Liberals are not considering raising the GST in order to pay for campaign promises without going deeper into debt.
Earnscliffe Strategy Groups鈥� Robin Sears told CTV Power Play that raising the GST is something the Liberals could consider.
鈥淭he most successful Liberal prime minister of our generation recognized that he shouldn鈥檛 keep a promise to abolish the GST when he came to power,鈥� Sears said.
Jean Chretien broke a promise made during the 1993 election to eliminate the GST and was twice re-elected.
