According to Finance Minister Bill Morneau, Ottawa is set to run an $18.4-billion deficit next year, even before accounting for various spending initiatives promised by the Liberals during their election campaign. The budget will be released on March 22, and is considered to be a major point of contention in Canada’s political landscape moving forward.
During the election period, The Liberal Party campaigned on a plan which would run a $10 billion deficit per year to fund their new initiatives, which coupled with the current fiscal-shortcoming, would equate to a projected deficit of approximately $30-billion.
“Our starting point is much further back than we thought,” Morneau told the House on Feb. 22.
In a possible act of political transparency, Morneau announced an update to the fiscal budget his department had released in November in order to stress the impact of the ever weakening economy and projections for economic growth.
Much of Morneau’s information has come from Finance Canada, who typically bases their budget on an average forecast from various private sector economists. Despite being consistent with 2015 projections, the lack of economic growth makes the additional spending of the Liberal’s literally unfeasible.
In the speech he delivered in Ottawa’s town hall, Morneau stated that the recent decline in growth forecasting has reinforced the government’s view that it needs to increase spending in infrastructure to give the economy a boost, a temporary shortfall that would ultimately be beneficial in the long term for the Canadian economy.
In addition, he also stated that the top one per cent have benefited much more than the middle class in the past four decades of Canada.
“Income inequality is an even bigger challenge in times of economic stress, especially for blue collar workers who tend to be the first to feel the effects of economic downturns,” stated Morneau at the event.
Mr. Morneau also stated that it will come as a shock to no one who currently resides in Alberta, Saskatchewan or Newfoundland and Labrador, where the economy has slowed considerably during the rapid fall of oil prices.
“There is no question that times are tough right now for many Canadians. A less ambitious government might see these conditions as a reason to hide, to make cuts or to be overly cautious. But our government believes strongly that the economic downturn makes our plan to grow the economy even more relevant than it was a few short months ago” said Morneau.
To-date, the government’s deficit forecast includes a near doubling of the 2016-2017 annual deficits as well as an increase in the annual spending of unforeseen events including errors from $3 billion to $6 billion in the 2016-17 and 2017-18 forecasts.
Ultimately, this means that the projected deficit would be approximately $18.4-billion, up over $6 billion from Novembers forecast.
These latest changes to the budget have also been further exasperated by the Liberals changes to income tax, support for Syrian refugees and the reversal of sick leave charges in various public sector jobs, as well as a $300 million fund to be put aside for Alberta to help “fiscally stabilize” the province.
Ultimately, only time will tell if the Liberals continue to add on to their deficit that has come not only from the Liberal’s over-ambitious platform, but also as reported by The Brock Press earlier this year, due to the inherited debt from Harpers tenure as Prime Minister. It’s up to both the Conservatives and the Liberals to come together and move forward in the wake of the ever weakening Canadian and global economy.