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

Vernon perfect getaway for Prince Harry and Meghan Markle, mayor says

Family-oriented community also home to Royal interests; film and helicopter industries

Group builds shelters for Vernon’s stray cats

Twenty insulated cat shelters were constructed by volunteers and delivered around town

True Stories: memoir-writers, reading at Vernon centre

Reading with local North Okanagan writers Art Dalton, Patti Shales Lefkos, Raven Dahl, Janelle Hardy

WATCH: Don’t just blame AIM, all North Okanagan road crews struggling

City streets are just as bad, if not worse, than highways

Several deer spotted in Vernon’s BX

One resident spotted a herd of seven in her neighbourhood

Older Canadians highlighted in Kelowna film project to fight ageism

The project is part of a campaign to combat ageism

Closed mills, housing surge support a positive forecast for lumber industries

B.C. lumber producers have closed mills accounting for 18% of province’s capacity, RBC report says

Good Samaritan pays part of rent for B.C. woman facing eviction in can-collecting dispute

Zora Hlevnjak, 76, supplements her pension by collecting cans and receiving public donations

Princeton – a Prince Town in waiting?

The Town of Princeton has been waiting 160 years for a Royal… Continue reading

Prince Harry and Meghan Markle on the move… to Kelowna?

The royal couple is looking for some new digs and Kelowna has a lot to offer!

UBCO partners with Boeing to test new anti-ice coating technology

The coating could one day be applied to all airplanes to prevent ice buildup

Revelstoke already double last year’s snowfall

The city is just below halfway to the snowiest winter on record

Kelowna’s last video store, Leo’s Videos, to remain open despite failed sale

Kelowna’s last video rental store will remain open and under its namesake’s ownership

Summerland drama students to stage Matilda

Story by Roald Dahl will be presented at Centre Stage Theatre in February

Most Read