Home » BLOG » Bill Morneau sets Canada on path for near-record deficits, growing to more than $29B over next fiscal year

Bill Morneau sets Canada on path for near-record deficits, growing to more than $29B over next fiscal year

Finance Minister Bill Morneau tables the federal budget in the House of Commons in Ottawa on Tuesday, March 22, 2016.

OTTAWA – The Trudeau government has confirmed what a lot of private-sector analysts have predicted for months: Canada is headed for a string of near-record deficits as it plows many billions of dollars into new programs – many of them promised, a few not – along with multi-year infrastructure projects that have yet to be decided.

After eking out a $1.9-bilion surplus in the previous fiscal year during the final months under the Conservatives, the Liberal Party will return the country to shortfalls, beginning this year with a $5.4-billion hole in 2015-16 and growing to a lot more than $29 billion within the next fiscal year.

In delivering Tuesday’s federal budget, Finance Minister Bill Morneau told Parliament the Liberals’ first spending document targets “revitalizing the economy within the years and decades to come, in order that it works for the center class and helps those working hard to become listed on it.”

FP0317_canada_deficit-C-GS

 

But the Liberal’s long-awaited blueprint lacked detail on how so when it will lift the country from its deficit hole.

Erasing that red ink will even take longer than Prime Minister Justin Trudeau anticipated in the months before and following his party’s Oct. 19 win over the Conservatives, then led by Stephen Harper.

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In his ever-first budget, Morneau has set the economy on target for at least five years of deficits – up until fiscal 2020-21- by launching a stimulus plan that will initially provide regulations to middle-class Canadians in addition to build and replace crumbling infrastructure.

“I would actually make the situation right across their fiscal forecast that the starting point probably isn’t as dire as they played it out,” said Douglas Porter, chief economist at BMO Capital Markets.

“What I’m concerned about is that they’ll basically use any surprises towards the best to increase spending in the years ahead,” Porter said. “And I suspect the best deficit numbers probably will are available in pretty close to these numbers, or a tiny bit better.”

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