Despite Erin O’Toole’s fairly recent entrance into politics — having been elected for the first time in 2012 — the former veterans affairs minister is now the leader of the Conservative Party of Canada.
He consistently polled second behind former Progressive Conservative Party leader Peter Mackay for the duration of the leadership race before winning with 59 per cent of the vote on the final ballot.
O’Toole has inherited a fractious party from outgoing leader Andrew Scheer, and his pitch to both his party and Canadians will need broad support if he hopes to become prime minister. Based on what he’s said on the campaign trail and in published platform documents, O’Toole’s plan includes policies to recover from the pandemic and attract undecided youth along the way.
Taxes, taxes, taxes
O’Toole has promised an extra $100,000 in tax breaks for new graduates under the age of 30. Anyone who completes an accredited apprenticeship, college diploma, or university degree would be eligible for the breaks for their first three years after graduation.
The plan would expand the existing basic personal tax exemption, which allows all income tax payers to earn a certain amount of net income tax-free each year.
The Conservative Party hopes that this approach will act as an incentive for skilled workers to grow the Canadian economy at home as opposed to expatriating to work abroad.
Cutting red tape
One of O’Toole’s stated economic objectives is providing small businesses with more financial help and fewer bureaucratic barriers. ‘Small businesses’ are formally defined as companies with fewer than 20 employees, and would include most student- and graduate-founded startups.
In 2014, the Stephen Harper government introduced the Red Tape Reduction Act with the goal of increasing productivity and reducing the financial costs of businesses. The Treasury Board of Canada Secretariat estimated that this act saved 290,000 hours of dealing with bureaucratic barriers.
Taking inspiration, the new Conservative leader has promised to appoint a minister with a mandate to reduce red tape and introduce at least one Red Tape Reduction Act every year.
Additionally, O’Toole plans on rolling back certain parts of Justin Trudeau’s government’s small business-related tax reforms. The government claims that the reforms closed loopholes that benefited the wealthy. Contrastingly, O’Toole argues that such reforms have only hurt middle-class, small business owners.
“Some reduction in regulatory rules would be useful,” Dr. William Mitchell, a professor of strategic management at U of T’s Roman School of Management, wrote in an email to The Varsity. “But it needs to be thought through rather than simply made as a sweeping promise.”
Dealing with debt
Prior to COVID-19, previous Trudeau government budget deficits had accumulated more inflation-adjusted debt per person than any other Canadian ministry not suffering from a recession or a world war. Growing national debt, due in part to larger interest amounts, is ultimately paid by future generations of Canadian taxpayers.
O’Toole plans on instituting a “Pay-As-You-Go” rule where every dollar in new spending must be matched by a dollar in savings. Former US President George H. W. Bush’s administration introduced such a plan as part of the 1990 Budget Enforcement Act.
New community projects would also be funded by existing resources. For example, O’Toole’s proposed Great Country Grant Initiative would aid community-based organizations while funded entirely by existing federal government departments.
O’Toole hopes that debt-conscious Canadians will look to him as the fiscally responsible choice. His appeals to small businesses are also well targeted, with 30.8 per cent of small businesses having seen a reduction in workers as of April this year.
However, in the midst of a pandemic economy, one must question if familiar political appeals will be as effective. “Part of the job of any government budget is to invest in infrastructure — both physical and human capital — that supports growth, which is particularly important in economically challenging times,” commented Mitchell.
“If a government refuses to invest, then we risk becoming locked into downturns rather than being able to grow out of them. Indeed, interest rates tend to be low during downturns… so that ‘debt’ in a downturn is almost cost-free… and pays for itself if it spurs growth.”