Liberal Leader Justin Trudeau isn't ruling out a deficit budget were he to become prime minister, blaming the Conservatives for making a "mess" of the federal books.
At last night's leaders' debate, Conservative Leader Stephen Harper admitted Canada is likely in a recession. Pressed by NDP Leader Tom Mulcair who noted there has been five straight months of a shrinking economy — six months, or two straight quarters, is the official definition of a recession — Harper acknowledged it.
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Until that moment, Harper had avoided saying it, pointing to projections that Canada will see overall growth for the year (the last two quarters are expected to be better than the first two).
"I'm not denying that," Harper told Mulcair. "What I am saying is that that contraction is exclusively in the energy sector. The rest of the economy is growing. It's projected to grow this year and into future years."
The parliamentary budget officer projects a $1-billion deficit for 2015-16 due to lower revenue because of the decreased GDP. That's a small deficit given Canada's $290-billion federal budget.
'Committed to balanced budget'
Many economists argue a small deficit is not a problem for the economy, particularly when it is shrinking and may need some increased spending as a boost. But the Conservatives have made balanced budgets a key policy issue and maintain the NDP and Liberals are less committed to that goal, arguing the other parties would take on too much federal debt.
On Friday, Trudeau said in Toronto that he couldn't commit to a balanced budget immediately if he becomes prime minister.
"The Liberal Party recognizes that Stephen Harper has put us in deficit right now. We are committed to [a] balanced budget," he said.
"But how long it takes to get there will depend on the size of the mess Mr. Harper has left behind."
The Liberals have long argued that the Conservatives aren't transparent in their budget documents.
'2nd recession on his watch'
Mulcair said his goal in the debate was to show Harper's economic plan isn't working.
"We are now, and Mr. Harper finally admitted it last night, in a second recession on his watch," the NDP leader said.
Harper, speaking in Oshawa, Ont., said 80 per cent of the economy is healthy and growing.
"The question is what do you do? We say you stick on the low-tax plan that has had us as world leaders…. what Mr. Mulcair would do is propose out of control spending" and permanent deficits, Harper said.
Harper didn't mention Trudeau in his response on the economy.