Canadians will soon make a single decision on a whole set of policy issues such as (but not limited to) economic policies, health care, education, defence, and the environment.

When it comes to the economic policy, the key to deciding which federal party’s platform is best for the economy is to determine which offers the best policies that help create an economic environment that encourages hard work, savings, investment, and entrepreneurial risk taking.

The foundation of such an environment is small government, responsible public finances, competitive taxes, free trade, and limited red-tape.

Here’s how the three main political party platforms stack up on economic policies.

Limited government and responsible public finances

Responsible public finances mean living within our means. The next federal government should therefore quickly eliminate the deficit through spending reductions and restraint.  Reduced and constrained spending means a greater share of the resources in the economy will be directed by individual Canadians, families, and businesses rather than governments.

Unfortunately, no federal party offers a truly austere fiscal plan.

The Conservative platform balances the budget by a specific date (2014-15) and does so without increasing taxes. It unfortunately provides $6.6 billion in goodies to special-interest groups over four years. But encouragingly, the part also says it will find $11 billion in spending savings.

The Liberals unfortunately, do not commit to a specific timeline for a balanced budget but propose reducing the deficit to one per cent of GDP within two years. The Liberals also propose new spending ($8.2 billion over the next two years) financed primarily by higher taxes.

The NDP proposes a substantial $38.7 billion in new spending over the next four years, financed by $40.7 billion in tax increases, while balancing the budget in four years.

Taxes

The sooner the government gets its fiscal house in order, the sooner it can promote economic growth by reducing personal and business taxes.

While the Conservative platform targets select groups and industries with tax credits that further complicate and distort the tax system, it does maintain the previously scheduled corporate income tax rate reduction to 15 per cent in 2012. On the personal side, the Conservatives propose income-splitting for couples (with dependent children under the age of 18) once the budget is balanced.

Unfortunately, the Liberals are pledging to hike the corporate income tax rate to 18 per cent and increase personal income taxes on stock options, which will impose a greater tax penalty on Canadian entrepreneurs.

For its part, the NDP proposes reducing the small business income tax rate to nine per cent from 11 per cent, but also proposes an immediate hike in the general corporate income tax rate to 19.5 per cent.

Freer trade

Freer trade brings forth many economic benefits by expanding the market for imported and exported goods and services.

The Conservative platform outlines a plan to sign free trade agreements with the European Union and India, and promises to work toward a joint Canada-US security perimeter to improve cross-border trade.

The Liberals also highlight the need improve cross-border trade with the US but only offer to explore “smarter agreements.” And they take a less decisive approach to increasing international trade through proposals for Global Network Agreements with China and India. While the Liberals claim these agreements boost trade, they also mandate collaborative projects in key sectors of the economy.

Unfortunately, the NDP platform makes no mention of the importance of trade.

Red-tape

Burdensome regulations often lead to higher prices and less innovation, thereby negatively impacting our living standard.

Here, the Conservatives promise to reduce red-tape on small businesses by 20 per cent, launch a red tape reduction commission, and implement a “one for one rule” which would eliminate an existing regulation for each new one enacted. While the Conservative Party does not outline its plan for environmental regulation, it does highlight extremely ambitious emission reduction targets which indicate that substantial regulation is forthcoming.

The Liberals mention the need to reign-in “unnecessary regulation” but do not offer any concrete strategy. They do, however, want to ban oil tanker traffic in Northern BC, halt all oil exploration activities in Canada’s Arctic, and propose an economically damaging cap-and-trade system.

Likewise, the NDP has plans for a cap-and-trade system along with additional environmental regulations for fisheries and trans-boundary waters.

When it comes to the economic policy, Canada needs a plan to significantly limit the size and scope of government, quickly balance the budget, provide substantial tax relief and dramatically reduce burdensome regulations. Unfortunately, all of the platforms are far from ideal.