Prime Minister Justin Trudeau stands with Bill Morneau as he remains Minister of Finance during the swearing-in of the new cabinet at Rideau Hall in Ottawa on Wednesday, Nov. 20, 2019. THE CANADIAN PRESS/Sean Kilpatrick

Liberals’ fiscal update shows billions more in deficits this year and next

Last time, they projected a $19.8-billion deficit. This time, it’s $26.6 billion

Canada’s federal budget deficit will be billions of dollars deeper than it was supposed to be this year and next, according to the Finance Department.

The figures released Monday morning show that the Liberals’ projected deficit of $19.8 billion for the 12-month period that ends in March is now slated to hit $26.6 billion.

And next year’s deficit is expected to be $28.1 billion, before accounting for promises the Liberals will unveil in their 2020 budget.

The Liberals’ election platform projected four years of deficits of more than $20 billion, including almost $27.4 billion in the upcoming fiscal year that begins in April 2020.

The Finance Department says the deeper deficit is largely driven by changes to how employee pensions and benefits are calculated, but also accounts for a tax break that takes effect on Jan. 1.

Still, the Liberals say their preferred measure of the state of federal finances — which calculates the deficit relative to the size of the economy — will keep improving, if not as quickly as it was supposed to.

Spending is also expected to go up faster on the Canada Child Benefit than the Liberals projected earlier this year, a reflection of pegging the value of payments to inflation and “an increase in the projected number of children eligible.”

The government also says that increased spending announced in the March 2019 budget will be “entirely offset” over the coming years by what the Liberals higher-than-anticipated personal and corporate income-tax revenue.

At the same time, revenues will decline for excise taxes and duties this year — largely from the Liberals’ lifting retaliatory tariffs on American steel and aluminum earlier than they planned — and over the coming years from “lower expected growth in taxable consumption.”

READ MORE: Re-elected Liberals would still run big deficits, despite new taxes

Federal officials are also promising the first phase of a spending and tax review that the Liberals say will result in $1.5 billion in savings starting next fiscal year, which the government has accounted for.

The update provided today from Finance Minister Bill Morneau comes on the heels of a week where the opposition Conservatives accused the government of creating the conditions for a “made-in-Canada recession.”

The government, however, projects that the economy itself will continue to grow over the coming years at roughly the rate calculated in the March budget.

The Finance Department projects growth will be 1.7 per cent this year and 1.6 per cent next year, after weakness late last year and early this year, particularly in the mining and oil-and-gas sectors. The projections would make Canada the second-fastest-growing economy among G7 countries, behind only the United States.

The Canadian Press

Like us on Facebook and follow us on Twitter

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta discussing early Stage 2 economic relaunch

Nineteen new COVID-19 cases confirmed by government Wednesday

Sylvan Lake-based Family Resource Network servicing Eckville, Benalto

Due to COVID-19 supports are being delivered through phone calls, texts, online platforms and emails

Documentary about a Sylvan Lake man and his team to be featured at Okotoks Film Festival

Living the Warrior Code documents Scott Mcdermott and his team’s journey back to the Ultraman race

Israeli, Chinese policies ‘concern’ Canada, undermine freedom, says Trudeau

Israeli, Chinese policies ‘concern’ Canada, undermine freedom, says Trudeau

House of Commons can manage virtual voting securely if MPs want it, Speaker says

House of Commons can manage virtual voting securely if MPs want it, Speaker says

Facing changes together: Your community, your journalists

Sylvan Lake News is firmly committed to seeing you through the changes ahead, but we need your help

Facing changes together: Your community, your journalists

Sylvan Lake News is firmly committed to seeing you through the changes ahead, but we need your help

Hydroxychloroquine does not prevent COVID after exposure to the virus: study

Hydroxychloroquine does not prevent COVID after exposure to the virus: study

Nunavut RCMP to consider body cameras as tension between police, Inuit grows

Nunavut RCMP to consider body cameras as tension between police, Inuit grows

Stockwell Day steps down from several roles after comments about racism

Stockwell Day steps down from several roles after comments about racism

Trudeau to join global COVID-19 vaccine fundraiser amid calls for fair access

Trudeau to join global COVID-19 vaccine fundraiser amid calls for fair access

Joint inquiry or review of mass killing taking shape, N.S. justice minister says

Joint inquiry or review of mass killing taking shape, N.S. justice minister says

Greens likely to hold virtual leadership convention due to pandemic: May

Greens likely to hold virtual leadership convention due to pandemic: May

Meng hearing schedule to expand; lawyers ask for ‘referee’ in case

Meng hearing schedule to expand; lawyers ask for ‘referee’ in case

Most Read