OTTAWA – Finance Minister Bill Morneau will introduce the federal government’s latest budget on March 22 — his first amid the economic uncertainty of the Donald Trump era.
Morneau made the announcement today during question period, billing the 2017 budget as one that will “create jobs and invest in our communities,” as well as “ensure our success in the economy of the future.”
The budget, the Liberal government’s second since the 2015 election, will land as Ottawa and corporate Canada scramble to assess the risks of possible and unpredictable policy actions from the country’s top trading partner.
There are fears of negative economic fallout for Canada from the decisions of the Trump administration, and it’s unclear whether Morneau’s budget will account for the unknowns.
Trump calling cards like a border tax, protectionist policies, corporate and personal tax cuts and a renegotiated North American Free Trade Agreement all pose an economic danger north of the border.
The budget will also follow a series of stronger-than-expected economic indicators in recent weeks. In November, Morneau’s fall fiscal statement predicted a deficit of $25.1 billion this year and a shortfall of $27.8 billion for 2017-18.
But even with the encouraging results of late for indicators like job creation and trade, Conference Board of Canada chief economist Craig Alexander said the “slightly” better outlook since the start of the year still has a huge cloud hovering above it.
“In the wake of the election victory by Trump, a lot of uncertainty was introduced into the economic forecasts,” said Alexander, who participated in Morneau’s Jan. 13 meeting to hear projections from private-sector economists.
Trump’s famous unpredictability means it’s impossible to know for sure the challenges Canada could end up facing, he added.
“When we actually have the budget, it will be interesting to look at it in a lens of how has the Canadian government responded to potential Trump issues. That’s not normally the way we read a budget.”
The Trudeau government has been criticized since last year’s budget for not outlining when it will bring the federal books back to balance following a string of projected annual, double-digit shortfalls until at least 2021-22.
The Liberal government cited a weaker-than-expected economy last year when it abandoned several firm fiscal benchmarks that the party gave prominence during the 2015 election campaign.
They ditched pledges to run annual deficits of no more than $10 billion and to balance the books in four years. Instead, they have focused on reducing the debt-to-GDP ratio — also known as the debt burden — below the current level by 2019-2020.
The Liberals have laid out a plan to run deficits as a way to invest billions into economy-boosting infrastructure projects over the coming years.
Morneau has reiterated that the government would be “fiscally responsible.”