HomeNewsPart of Liberals’ affordability plan to fight inflation was supported by Conservatives

Part of Liberals’ affordability plan to fight inflation was supported by Conservatives

Part of Liberals’ affordability plan to fight inflation was supported by Conservatives

Dueling visions of how to tackle inflationary cost pressures met in the middle Wednesday with the Conservatives unexpectedly signalling they’ll support one of three new measures put forward by the Liberals.

But the two federal parties continued to cross swords nonetheless, with the Liberals accusing Conservative Leader Pierre Poilievre of fiscal irresponsibility and a lack of compassion, and Poilievre continuing to insist the Liberal measures are meaningless without additional steps.

The Liberals debuted their new affordability package earlier this month and tabled two pieces of legislation this week to make it official.

One bill will double the existing GST tax credit for six months, while the other bundles together a $500 top-up to the housing benefit with cheques to help some families cover the cost of their children’s dental care.

Emerging from their weekly meeting on Parliament Hill, the Conservatives signalled the GST rebate meets their demands for tax relief.

“We have been calling for the government to offer Canadians real tax relief,” Conservative MP Michael Barrett said.

“If this is what it looks like when the prime minister is starting to pay attention to the affordability crisis, we’ll take that up in the House and may support it.”

Their decision to back the GST bill comes after days of Poilievre railing against the Liberals’ affordability plan, arguing the $4.6-billion package will fuel inflation and that any benefits will be eaten up by rising costs.

But the fact there are two bills gave them a way not to rule out the entire package as they do agree, multiple Conservative MPs said, that the GST relief is broad-based and helpful.

“What we’re doing is giving (low-income earners) back money that they paid through taxes already,” said Conservative deputy leader Tim Uppal, “so it’s essentially a tax cut for them. That’s something we would support.”

The housing and dental benefits, by contrast, are but a drop in the bucket in the face of rising housing prices and stray too far into provincial jurisdiction over health care, the Conservatives argue.

The Liberals said refusing to support them showcases a lack of compassion.

“Do they really think a six-year-old should not go to the dentist because her parents cannot afford it?” Finance Minister Chrystia Freeland said during question period.

“Do they think a low-income essential worker struggling to pay her rent could not use an extra 500 bucks? I think Canadians deserve this support.”

Both the housing and dental benefits were key demands from the NDP as part of a deal it struck with the Liberals last year to prop up the minority government until 2025 in exchange for action on its priorities.

The GST tax relief was also an idea proposed by the NDP, though not officially part of the agreement.

NDP Leader Jagmeet Singh claimed credit for the Tories’ decision to back it, pointing to an attack ad his party released this week aimed at poking holes in Poilievre’s leadership campaign pitch to working Canadians.

“If they’ve changed their mind, it’s because we put the pressure on,” Singh said.

Although Poilievre has been leader for less than two weeks, Conservatives have pressed the Liberals for months to deliver some kind of policy response to rising costs that also doesn’t add to the deficit or fuel inflation.

According to Jennifer Robson, an associate professor of political management at Carleton University, the boost to the GST rebate is unlikely to spur further inflation.

At $2.5 billion, the overall injection of cash to the public is marginal compared to overall federal spending this year of $190.3 billion.

Robson said the rebates will also go to the lowest-income earners, who have likely cut back on purchasing essentials like food and home heating due to surging prices.

The extra money would possibly help them cut back less, rather than push them to spend on entirely new, superfluous goods that would drive inflation, she said.

“It might help them stay closer to their consumption (levels) last year,” Robson said.

“On balance, the GST credit is not going to be inflationary.”

Under Poilievre, the Tories have further refined their demands. They’re arguing for a freeze on planned increases to CPP and EI premiums set to go into effect in January, which they refer to as “payroll taxes.”

Kevin Milligan, an economics professor at the University of British Columbia, said it’s fair to describe these contributions that way, but stressed that the money they raise is used to pay out retirement income and supports for people who lose their jobs.

Milligan said freezing the contribution rate would keep some money on workers’ paycheques, but also reduce how much money is going into CPP and EI.

“If you’re going to cut back the (payroll) taxes, you have to tell me what you’re going to do with the benefits,” Milligan said.

The Liberals picked up on this during question period on Wednesday.

“At a time of global economic uncertainty, it is the height of irresponsibility for the Conservatives to suggest that we, as a country, stop putting money away for our retirement,” Freeland said.

Robson said the Liberals’ affordability measures tabled in the House this week and the Conservatives’ calls to freeze pension and EI contributions fall short on tackling the “main driver” of today’s inflation.

By Robson’s calculation, halting the EI deduction increase alone would prevent around $3 billion from going into the federal fund for jobless supports.

“The Liberal package seems to be the lesser of the two evils,” she said, “but neither of these approaches is dealing with supply side constraints.”

This article was first reported by The Canadian Press