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

Traffic redirected after crash on McKenzie Avenue

Saanich Police responded to Thursday evening collision

North Saanich artist brightens pandemic with whimsical signs

Artist Anna Trelford decorates her fence with signs that riff on COVID-19 pandemic

Man who bound, murdered Langford teen still a risk to public: parole board

Kimberly Proctor’s killer is still ‘mismanaging emotions,’ has had ‘temper tantrums’

Tour de Victoria postpones 10th annual ride to 2021

Ride that draws more than 3,000 cyclists to Greater Victoria was set for August

Mission prison COVID-19 outbreak ends, 9 new cases in B.C.

New positive test at Port Coquitlam care home

POLL: Do you agree with the provincial government’s decision to increase the minimum wage?

B.C.’s lowest-paid workers will be getting a few more dollars to try… Continue reading

VIDEO: Humpback whales put on quite a show

The ‘playful’ pod lingered by a Campbell River tour operator’s boat for quite some time

Getting hitched at historic B.C. gold rush town still on table during COVID-19 pandemic

Micro-weddings, online visits, offered at Barkerville Historic Town and Park

Stolen gargoyle returns to its perch on central Vancouver Island yard

Petey, a concrete gargoyle statue, was returned by Nanaimo RCMP after being found by city crew

Revelstoke woman finds welcoming letter on her Alberta-registered truck

There have been multiple reports online of vandalism to vehicles with Alberta licence plates

Spirit bear possibly spotted in West Kootenay

A local resident spotted the white-coloured bear while on an evening trail run near Castlegar on May 27

B.C. businesses ‘can’t shoulder burden’ of COVID-19 sick pay

Trudeau’s plan should be tied to federal emergency aid

B.C. teacher reprimanded for sharing homophobic and sexist memes, making racist comments

Klaus Hardy Breslauer was accused of making a laundry list of concerning decisions as a science teacher

Most Read