Canada’s fiscal outlook just keeps getting worse

Finance Minister Bill Morneau’s most recent fiscal update painted an ever-gloomier picture—one of slowing growth, and bigger deficits


 
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Minister of Finance Bill Morneau participates in a town hall meeting ahead of pre-budget consultations in Ottawa, Monday February 22, 2016. THE CANADIAN PRESS/Adrian Wyld

Minister of Finance Bill Morneau participates in a town hall meeting ahead of pre-budget consultations in Ottawa, Monday February 22, 2016. THE CANADIAN PRESS/Adrian Wyld

No one could blame Finance Minister Bill Morneau if he felt a pang of anxiety whenever an aide tells him there’s a revised fiscal outlook waiting on his desk. Every time an economist has his ear, the news is bad. As oil prices keep searching for rock bottom, GDP growth remains stubbornly sluggish and projected federal deficits continue to balloon. And revised forecasts aren’t getting better.

Last summer, when Justin Trudeau confidently announced several years of modest deficits, anchored by a promise to table a balanced budget in 2019, his campaign drew on a report from the Parliamentary Budget Office that predicted a modest deficit for the current fiscal year and a couple of years of surpluses to follow. Everything changed after the Liberals rose to power. The Department of Finance’s updated forecast in November, and their most recent numbers released today, paint an ever-gloomier picture. Canada’s real GDP will continue to rise, but more slowly.

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And deficits? They’re about to get a lot bigger.

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It’s no secret that the plunging price of oil has had a nasty effect on Canada’s economic prospects—and it’s gotten even worse since Morneau’s fiscal update last November.

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Kevin Milligan points out that all of this troubling data means the Liberals will likely break three key election promises on fiscal issues: a limit to $10 billion on annual deficits; a balanced budget by 2019; and a declining debt-to-GDP ratio every year in the government’s first term. Whatever the political price of those broken promises, writes Milligan, we needn’t worry too much for Ottawa’s long-term financial stability. It’s the provinces that are in real trouble.


 

Canada’s fiscal outlook just keeps getting worse

  1. The looting of Canada by the same Liberal and Bay Street clowns that looted Ontario begins. The only people happy today were the banksters’ economists.

    There is no free lunch. Deficits borrow economic growth from the future.

    • Not necessarily. If all taxes were eliminated, the country would get a huge deficit, but a lot of growth. And if all taxes were massively increased, the deficit could be eliminated, but growth would be destroyed.

      The trick is getting the balance right. And if economics was a hard science, we would know exactly what that was.

    • So how come we don’t dismantle these cement horror’s called city’s and shut the boutiques down and hunt and grow our food ? Maybe for entertainment we could build our own instruments and include everyone in a song…….

  2. Obviously the history of Liberal surpluses- 9 in a row, consequently squandered by the CONservatives and then followed up by 7 more years of deficits is completely ignored by Ambrose and the Conservatives wailing about the Liberals looting Canada.

    • Dianne, please educate yourself. The Liberals were only able to run surpluses because the Mulroney Progressive Conservatives implemented the GST which was a huge revenue generator for the federal government. The Chretien Liberals ran against the GST, promising to eliminate it, which was a lie in order to get elected. Once the Canadian voter was duped by this, the Liberals used it to generate moderate surpluses. Good for them, but it was only made possible by the Conservatives.

      When the Harper Conservatives were elected to a minority government, they ran two surpluses before the 2008 financial crisis and then posted a modest deficit at $5 billion (which according to Trudeau and his supporters, is no biggie). At this point, the opposition parties demanded that the Conservatives pledge massive stimulus spending or they would vote against he Conservative budget and form a coalition government to overtake the CPC. Why do people like you pretend that this didn’t happen and that the deficits are solely to be blamed on the Conservatives?

      • True and then the Cons. ended the 2015 year with a surplus (as confirmed by the Finance Ministry under a Liberal minister) which JT managed to spend in his first 100 days by giving it away to the world so that Canada can be ‘back’. News flash – Canada never left, under the Cons. we just didn’t believe everything the world was trying to promote!

  3. Obviously the history of Liberal surpluses- 9 in a row, consequently squandered by the CONservatives and then followed up by 7 more years of deficits is completely ignored by Ambrose and the Conservatives wailing about the Liberals looting Canada.

  4. Amid all the current economic gloom and doom, comes word from 24 Sussex Street, Ottawa, that should brighten the Nation’s mood and reassure us that the universe is unfolding as it should and by summer “sunny ways” will certainly return. The good news: PM Justin Trudeau has announced that he will march in Toronto’s Gay Pride Parade this summer. I, for one, can hardly wait.

    • Of course he will. The man would not miss a photo op. That’s the whole reason he wanted to become prime minister to begin with!

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