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

Comments are closed

Just Posted

‘We have your grandson’ – Princeton seniors scammed out of thousands of dollars

Two elderly Princeton men are saying they were robbed of thousands of… Continue reading

Four people rescued after floating past Penticton’s Skaha Bridge

Elevated water levels prompts safety message from local fire department

Young Stars Classic postponed due to COVID-19

The event was set to return in September after missing 2019

Bags of dog feces donated to Princeton charity thrift store

A Princeton Crisis Assistance Centre volunteer was made almost physically ill after… Continue reading

All community COVID-19 outbreaks declared over in B.C.

Abbotsford manufacturer cleared by Dr. Bonnie Henry

B.C. First Nations vow to keep fighting after Trans Mountain pipeline appeal denied

Squamish Nation, Tsleil-Waututh Nation and Coldwater Indian Band made the application

Noose graffiti not tolerated by Vernon resident

Woman, son paint over hateful image painted on neighbourhood fence

‘Queue jumpers’ not welcome in B.C. as COVID-19 U.S. cases rise: Horgan

Premier Horgan said he’s heard concerns that Americans have stopped at Vancouver hotels instead of heading to their destination

HERGOTT: The right to resist unlawful arrest

Paul Hergott is a personal injury lawyer based in West Kelowna

Finale of seven-week food drive arrives at FreshCo Kelowna

The new grocery store has partnered with the organization for a food drive

VIDEO: Active graduate receives Summerland Secondary School’s top honour

Devyn Slade was presented with the Verrier Award and Matsu Memorial Scholarship

US officer resigns after photos, connected to death of black man in 2019, surface

Elijah McClain died, last summer, after police placed him in a chokehold

Most Read