Feds won’t jeopardize goal of balancing books by 2019

Finance Minister Bill Morneau recommits to target in speech to business audience


TORONTO — The federal government won’t jeopardize its goal of balancing the budget in 2019 to improve its ability to pay back the debt, Finance Minister Bill Morneau said Monday.

The Liberals, who had promised to keep annual deficits under $10 billion, have recently started emphasizing instead their commitment to keep the debt-to-GDP ratio on a downward trajectory every year until the end of its mandate.

Experts have said the debt-to-GDP ratio — which is calculated by dividing total federal debt by the overall size of the economy, as measured by nominal GDP — will be an easier target to meet.

Some have suggested the government could run annual deficits of up to $25 billion and still meet the debt-to-GDP target, provided that the economy grows at a decent rate.

The government projects the ratio will gradually fall each year from 31.1 per cent in 2015-16 to 25.2 per cent in 2020-21.

Following his speech Monday before the Toronto Region Board of Trade, Morneau said the government won’t singularly focus on one of its three economic goals — to grow the economy, reduce the debt-to-GDP ratio and balance the books by the next election — at the expense of others.

“We need to think of the three of them together,” he said.

Morneau also announced that the government will seek advice from experts in Canada and abroad on how to boost economic growth by forming an advisory council. The group will include people who have experience growing successful economies, from both the private and public sectors, he said.

He said the advisory council, which will be unveiled in the new year, will help the government figure out how to deal with the country’s longer-term economic challenges.

The economy contracted over the first two quarters of 2015 and it has struggled to fully rebound following the steep slide in commodity prices and the failure of other sectors to pick up the slack.

Morneau has also said that the Liberals inherited a worse-than-expected fiscal environment from the former Conservative government.

Morneau, who made his remarks the week after announcing an increase to the minimum down payment for homes between $500,000 and $1 million, said he doesn’t currently have any other new measures to introduce to cool down overheated housing markets.

“If and when we do we’ll certainly let people know, but for now we’d like to see how these measured approaches have an impact on those pockets of risk,” he said.

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Feds won’t jeopardize goal of balancing books by 2019

  1. Let me try to correctly what Mr.Morneau is trying to communicate to us here:
    Since he will not rein in the Government spending program, we may safely assume that other things being equal, he will be adding annually $25 billion to the current debt of $612 billion (all figures from Macleans economic charts). At the end of their five year term, the total debt 2019 will be approximately $737 billion. Yet the same time as the debt/GDP ratio is supposed to improve from 31.5% to 25.2%. We will also witness an economic growth from 1943 billion in 2015 to 2921 billion in in 2019. This is to be produced by an astounding 8.5% annualized rate. Assuming that we are not in China, but in Canada, don’t you think that this is all smoke and mirrors?
    Again, if you want to look closely at their ambitious debt reduction from 31.5% to 25.2% over the same five year period, it is plain that there is nothing ambitious about it. It is merely an annualized rate of 1.2% only. Do not forget that when Harper took power, the debt/GDP ratio hovered around 70% and when he left office, it had come down to 31.5%. It had touched 28% just prior to 2009 crisis. Even if you ignore that significant statistic, we still get an annualized reduction rate of 3.5% for his term. All that Mr. Morneau’s voodoo accounting can produce is a puny 1.2% reduction extracted from a whopping 8.5% growth per year. Well, we are not getting an 8.5% growth and we are not getting any reduction of 1.2% either. Be thankful for the fact that when the advanced economies of the world were running 100%-120% debt ratio due to the slump of 2009/2010, Harper was still busy reducing our debt/GDP ratio. (Again, all of this is Macleans statistics). Don’t you think that some sort of gratitude is due here for a magnificent job done?
    The Liberals knew everything that Harper knew about the economy and the Government Books. If that’s not true, sack the PBO right now and be done with that bloated bureaucracy. Stop being childish and whining about the economy. The oil glut is a global phenomenon and Conservatives didn’t produce one specifically for your benefit. If you had been productive enough during your years in opposition, we could have at least improved the marketing potential. But you were busy politicking even though you knew jolly well that our social payments depended entirely on the proceeds from a dirty oil economy. You still do not realize that unless and until our market economy comes up with novel products to compensate for the failing commodity market, such a failure will only produce disastrous results for our seniors and low income families. Unfortunately, you have decided to let political correctness play havoc with the lives of Canadians. The amazing thing is that it looks certain that in the year 2019, you will still be blaming Mr. Harper for your all your woes. If it is too hot in the kitchen, the time to get out is now, Mr. Morneau. The sooner you understand this reality, it will be better for the Canadians. Somebody has got to advise Mr. Trudeau properly? Don’t you think so?

    • Harper came in to power after 10 consecutive surpluses. Yes, there was a bad global recession during his tenure, but he wasn’t able to recover from it.

      Also, not sure where you get the 70% debt to GDP ratio when the Conservatives took power. All sources I find puts it just under 30%.

      And your analysis assumes a horrific deficit that isn’t reduced in future years.

      Please remove your blue-tinted glasses. The Conservative historical record speaks for itself.

      • I don’t think anyone honestly thinks the Liberals will balance the books by 2019, but as has already been pointed out, I’m sure they’ll find some way to blame Harper for it.

        something along the lines of, “To correct the inequality imposed by Harper, we had to make unforseen “investments” to First nations, women’s groups, poverty, immigrants and anyone else who should vote Liberal..er, I mean, everyone else who wasn’t treated fairly…..yadda..yadda..yadda…”

        you get the picture.

      • partridge, you correctly point out that the Liberals before harper had consecutive surpluses.

        what you fail to mention however, is that the Liberals balanced the books and got the economy back on track by stealing the policies of the REFORM PARTY. And guess who wrote the economic policy for the Reformers Partridge?

        it was some young dude named Stephen harper.

        the Liberals…and Canada should be thanking harper for that bit of work.

      • Please see Jason Kirby, Dec 7, 2015, Macleans – Chart No.8 by Stephen Gordon
        I may have my biases but none of it shows up in my commentary. I do not practice intellectual dishonesty. And I do not belong to any political party. The problem with the current government is that they never costed any of their promises. They just wanted to capture the votes by hook or by crook. A simple admission of error and consequential “path correction” would actually go a long way to raise their stature among the voters. But there is no sign yet that they will do it anytime soon though.

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