Promises promises

Late last week the Trudeau Liberal government released a Fall Economic Statement, promoted as a “mini-budget”.

Why? One can assume that it was a clever play on words suggesting this fiscal announcement was small when in reality it proposes to significantly increase more deficit spending.

First some context.

You may recall that PM Trudeau was elected in 2015 with a promise to run several “small” deficits before he made what he called a “cast in stone” promise to return to a balanced budget in 2019.

The promises at that time were “small deficits” of $ 9.9 billion in 2016, $9.5 billion in 2017, $5.7 billion in 2018 and a return to a $1 billion surplus in 2019.

How did those promises turn out? They didn't.

In reality the size of these deficits were much larger.

A $17.8 billion deficit in 2016, a $19 billion deficit in 2017, a $14 billion deficit in 2018 and a $39.4 billion deficit in 2019.

Keep in mind that all of this was before the pandemic.

Fast forward to what the Trudeau Liberal Government announced in their mini-budget last week.

A deficit this year of $36.4 billion, followed by a $30.6 billion deficit in 2023, another $25.4 billion deficit in 2024, with a further deficit of $14.5 billion in 2025 that will lower to a $3.4 billion deficit in 2026 and finally a $4.5 billion surplus in 2027.

Aside from the obvious that this Liberal Government has never established itself as being able to come even close to meeting the fiscal promises it makes, there is another challenge.

Once again we are in a situation where these are all deficit forecasts, meaning the actual deficits could be much higher, as has been the case in the past with this particular Liberal government.

In fact, even within this “mini-budget” the government also includes a “downside scenario” in which the federal deficit this year could be as high as $49.1 billion, followed by $52.4 billion in 2023 and $42.3 billion in 2024.

In this downside scenario, instead of a small surplus in 2027, there would still be a deficit of $8.3 billion.

There is also one more alarming trend.

As prices rise with inflation, so do the taxes on all those goods and services that now cost more, meaning the government actually receives more tax money from struggling consumers trying to pay the bills.

As an example of this, the actual federal government revenue received was actually $19 billion higher in this “mini-budget” than was forecast in last April’s budget.

In other words, at a time when the federal government is receiving increased tax revenues, at your expense -- due to higher prices -- it is taking this extra revenue and still spending it while creating deficits significantly larger than what they first campaigned on back in 2015. 

As I mentioned last week, Desjardins (from Quebec) now forecasting that Canada’s debt servicing costs will hit $49.8 billion next year and we could be spending more money servicing debt than the total of the Canada Health Transfer spending for 2022/23, that is expected to rise to $45.2 billion.

​My question this week:

Do you find this “mini-budget” credible?

I can be reached at Dan.Albas@parl.gc.ca or call toll free 1-800-665-8711