As part of our 2004 federal election coverage, Investment Executive asked the major national political parties to outline their fiscal platforms. Monte Solberg is the Conservative party’s senior critic for Finance and is vice chair of the House of Commons Standing Committee on Finance.

He also serves as the chairman of the Conservative party caucus economic sub committee and is a member of the priorities and planning committee of the Conservative caucus.

He has served as the Member of Parliament for Medicine Hat since 1993. During that time he has served on numerous committees and in various critic capacities for the official opposition, including Human Resource Development, Canadian Heritage and Foreign Affairs.

How low do you think the federal public debt needs to be as a percentage of GDP? When would you expect to reach it?
As stated in our platform, a Conservative government will introduce a legislated debt repayment plan that sets a target debt-to-GDP ratio. Unfortunately, academic research has failed to identify an ideal debt-to-GDP level. Nevertheless, reducing the federal debt to at least 25% within the next 10 years should be considered a minimum objective given the demographic pressures that begin to exert in the not too distant future. An annual debt reduction of $3 billion and average nominal GDP growth will put the ratio below 25% by 2014-15.

Of course, the reduction of public debt must be done in a planned and orderly manner that recognizes the importance of federal debt in the financial market, and the need for stable, low-cost funding.

Are you prepared to run deficits if necessary? (The Conservatives have said doing away with the contingency reserve and/or economic prudence is one source of cash — running a deficit then becomes a possibility if there is no contingency reserve and/or economic prudence.)
A Conservative government is not prepared or willing to incur budget deficits to finance tax reductions or program spending enhancements. Given the fiscal history we are not willing to go back to the days of deficits. The future of federal finances should be budget surpluses and debt reduction.

What areas of program spending can be cut to pay for election platforms such as health care, defense and funding the cities? How high are you prepared to let program spending go as a percentage of GDP?
A Conservative government would not engage in spending cuts to pay for platform promises with the exception of making the reduction of business taxes contingent upon lowering corporate subsidies. Ultimately, corporate Canada will have to decide whether it wants tax cuts or subsidies. If, as the Liberal claim is correct, there is about $3 billion in expenditures that can be reallocated to higher priority areas, then a Conservative government would have to consider the merits of a potential reallocation.

Conservative platform promises will be financed from forecasted budgetary surpluses. The reason that our surplus forecast is somewhat higher than those of some private sector estimates is due to the fact we do not accept the Budget’s estimate spending for fiscal 2003-04. The Budget estimates that program spending totalled $143.4 billion last year, while our forecast indicates that spending was below $140 billion. In fact, the four budgets previous to the most recent have overestimated program spending on average by $3.2 billion. For example, Budget 2003 estimated spending for 2002-03 would total $138.6 billion, but actual spending reported a few months later was $133.3 billion.

Will you allow Canada’s banks to merge?
A Conservative government believes that mergers in the financial services sector represent a legitimate business strategy and therefore should not be arbitrarily ruled out, but should be assessed based on individual merit. The current policy review should be expedited to provide the industry with much needed clarification so that firms can determine their best course of action.

Do you support a national securities commission?
A Conservative government believes that the existing regulatory structure imposes too heavy a burden without commensurate incremental investor protection. The system does need reform to reduce the complexity, while ensuring world-class investor protection. There are very good arguments for and against a national securities regulator. In the end, the choice must balance respecting different regional capital markets against investor protection and the international competitiveness of the entire financial system.

How would you change the current retirement savings regime?
A Conservative government would introduce a tax-prepaid savings program similar to that in the United States and United Kingdom called the Registered Lifetime Savings Plan (RLSP) with an annual limit of $5,000. This would augment the RRSP rather than replace it. Greater detail can be found in our platform.