ELECTION Think tanks cast doubt on Tory platform's math Plan seen taking big social services cuts

HEATHER SCOFFIELD OTTAWA Two major economic think tanks cast doubt yesterday on the Conservatives' ability to cut taxes and boost health care while keeping their vow not to slash social services.

The chief economist at the Bank of Nova Scotia and the head of the C.D. Howe Institute both say that the Conservative platform is affordable, but only at a cost to other government programs.

"Ottawa would have to reduce spending in other areas, and the choices would not be easy," Jack Mintz and co-author Yvan Guillemette of the C.D. Howe Institute say in a paper released yesterday.

Politicians should be explaining to the electorate how they would make such choices, they add.

Warren Jestin, chief economist of Scotiabank, came to much the same conclusion after examining the Liberal and Conservative platforms.

"Unless it is true that there is a lot of fat there [in Ottawa], you'd have to pare back a lot of the programs quite substantially," Mr. Jestin said in an interview yesterday. After years of trimming government budgets, "there isn't the huge amount of fat in the system that the public takes for granted is there." Conservative leader Stephen Harper has put forward an election platform that includes plans to cut taxes by about $39-billion over five years. At the same time, the party proposes $13-billion more for health care and $7-billion more for defence. All told, the Conservative measures add up to $57.8-billion over five years.

The party says it's affordable, and that there will be plenty of money left over for debt payments and to allow for a downturn in the economy, as long as government spending is held at a growth level of just under 3 per cent a year.

While party officials recognize that many locked-in government spending programs grow unstoppably at rates much higher than 3 per cent, they argue they can average 3 per cent by keeping other, more flexible, program spending to growth levels significantly below 3 per cent -- but still growing.

No major spending cuts will be required, they say, except for $10-billion over five years in corporate subsidies, as laid out in the platform.

But that's easier said than done, the economists say.

Mr. Guillemette and Mr. Mintz examine other countries' spending and taxation patterns, and conclude that Canada could afford higher health care spending and lower taxation by shifting money away from other areas of public service.

"It certainly would be hard to cut taxes and spend more on health care if such efficiencies in public services cannot be achieved," they say.

Mr. Jestin, too, says the Conservative spending assumptions are possible, but extremely difficult in the first couple of years of a mandate.

And even if non-priority spending areas continue to grow at a level of about 1 per cent, as Conservative officials say, that, in per capita terms, feels like a spending cut, Mr. Jestin said.

"There is going to be some pain in particular areas." The Liberals argue that the Conservative plan is fiscally irresponsible and would lead to either a runup in deficits or cuts to major social programs such as health and seniors' benefits.

Mr. Harper confronts the criticisms by frequently rhyming off a list of economists who endorse his numbers. However, none of the economists he mentions officially supports his plan.

A couple of them -- Global Insight (Canada) and the Bank of Montreal -- have managed to produce fiscal forecasts that resemble the Conservative assumptions, but both organizations say cuts may be necessary to make ends meet.