Prime Minister Justin Trudeau headed into the 2015 election pledging three years of modest deficits, that haven't panned out
Trudeau’s finance chief, Bill Morneau, will release his second federal budget Wednesday and all signs point to more red ink: annual deficits are presently projected in the $30-billion range — the highest since the aftermath of the 2008 downturn — with no forecast return to balance. Some are predicting Morneau will have to hike capital gains, or other taxes, to keep deficits in check.
But in an era of Brexit and Donald Trump, Morneau sees deficits — driven in Canada by both new spending and a commodities downturn — as something like the price of doing business. Instead, he identifies a different measure of success: raising hope, something raising taxes or cutting benefit diminishes.
Morneau's first budget announced new social-program and infrastructure spending that revealed a deficit triple what Trudeau campaigned on. That debut budget forecast a $29-billion shortfall for the 2017-2018 fiscal year, or 1.4% of gross domestic product. It also projected government measures would add 0.5% to GDP in 2016-2017, and 1% n the upcoming year.
Morneau’s tenure as finance minister has coincided with more robust growth. The economy expanded 1.4% in 2016, compared with 0.9% in 2015, a challenging year because of the oil-price collapse. Experts predict a 2.1% expansion in 2017.
A poll released by the Angus Reid Institute this week found the share of those identifying deficits as a top concern has steadily grown under Trudeau, to 22% from 12% when he took office.
Morneau has said the budget is aimed largely at innovation and skills training and will stick by his commitment to a declining debt ratio. Morneau also said the budget would have something to say on tax, declining to specify.
