Finance Minister Bill Morneau defends bigger deficits, sticking to Liberals’ stimulus script

OTTAWA – As debut performances go, Finance Minister Bill Morneau managed to stick close to the Liberal script on the requirement for deficit-fuelled stimulus spending, and avoided any major policy pratfalls, in his first appearance before Canadian lawmakers.

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While such events usually provide fodder for heated partisan debates, Morneau’s testimony towards the House of Commons finance committee on Tuesday drew only limited criticism in the all-party committee, with the only real grilling coming – unsurprisingly – from the Conservative finance critic who demanded to understand the way the new Trudeau government managed to turn a Tory surplus, although meagre, into a multi-billion-dollar deficit.

In his opening statement, Morneau said the government’s 2016-17 budget, to be tabled on March 22, will “create conditions for growth.” Those include campaign offers to sweeten child benefits and supply tax breaks for middle-class Canadians.  

Already, the Liberal government is preparing Canadians for a string of deficits over its four-year mandate? beginning with a shortfall with a minimum of $18.4 billion in the coming fiscal year – not counting paying for infrastructure projects along with other new programs, which many economists say will likely push to total shortfall to as much as $30 billion.

“There will be more to complete,” Morneau said. “Over the coming months, the government will develop a strong growth strategy designed to deliver strong and sustainable growth which will benefit all of us, and better living standards for those Canadians. And we’ll deliver that strategy before year-end.”

Much of that work will fall to the new Advisory Council on Economic Growth, chaired by Dominic Barton, the top of worldwide consulting group McKinsey & Co. “Their the first will be finding ways to increase our productivity,” Morneau said. “So, as our demographics shift, we nonetheless continue to enjoy the highest possible quality lifestyle. This is long overdue.”

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Morneau said other political parties “who committed over the past election campaign to a balanced-budget-at-any-cost approach would be making cuts of tens of billions of dollars at precisely the wrong time.”

“This could have resulted in massive job losses in a time of already high unemployment. This would have resulted in program cuts at a time when regions and population segments need those programs most,” he added. “To become frank, this could have likely led us into another recession.”



But committee member Lisa Raitt, the Conservative finance critic, defended the Harper government’s handling from the economy, telling Morneau that “we handed a surplus, minister, in November and December of the year whenever you took over.” 

“You’re eroding the surplus that was handed for you with a Conservative government, and that any deficit for the year 2015-2016 is clearly around the hands of your government.”

Morneau, however, strongly rejected that reading of the federal government’s fiscal position.

“In the last two months of the season, we have a reduction in revenues as well as an increase in expenses. What that leads to is a situation where you cannot take a look at half of the year, and certainly you can’t take a look at 30 days or any other month and are available to the conclusions about our situation,” he said. 

“We took a look at the finances left us through the previous government and we discovered that we’d be (put) into a deficit for twelve months 2015-2016.”

gisfeld@nationalpost.com

Twitter.com/gisfeld