Liberals to roll out first budget March 22, amid financial uncertainty
Liberal government will roll out first budget Mar. 22, promising to move ahead with investments in a poorly performing economy that will push deficit to more than $18 billion.

thestar.com
Feb. 22, 2016
By Bruce Campion-Smith

The Liberal government will roll out its first budget Mar. 22. It is promising to move ahead with investments in a poorly performing economy, and the moves will push Ottawa’s deficit to more than $18 billion.

The slow economy is projected to cut federal revenues by $11 billion over the next two years, crippling the Liberal vow to keep the deficit to under $10 billion during that timeframe.

Instead, finance officials said Monday that the deficit is expected to be at least $2.3 billion in the current fiscal year, $18.4 billion in 2016-17 and $15.5 billion in 2017-18.

Those numbers will soar higher as they don’t include the majority of the Liberals’ spending pledges, including big investments in infrastructure.

But officials stressed Monday that Canada’s debt-to-GDP ratio remains the lowest of the G7 nations.

“Our starting point is much further back than we thought,” Finance Minister Bill Morneau told a town hall meeting in Ottawa Monday morning.

Despite the larger-than-expected deficit numbers, the Liberal government vowed to move ahead with promised investments in the economy.

“In order for us to provide the growth the middle class needs, short-term deficits will be larger than expected,” the finance minister said.

He said Canadians had a choice in the October election between economic growth or “cuts, cuts and more cuts.”

“Given the economic situation in which we now find ourselves, Canadians made the right choice,” Morneau said.

The Liberals came into office last fall on a raft of promises, including an infrastructure spending spree, worth an extra $60 billion over 10 years, that would push Ottawa into deficit.

But Liberal Leader Justin Trudeau pledged the deficit would be held to $10 billion over the next three years and eliminated by the end of his government’s first mandate.

Former Conservative Leader Stephen Harper mocked the Liberals during the last election for promising a “tiny deficit, so small you can hardly see it.”

Monday’s briefing confirms that promise is out the window as the federal struggles with the impact of slowing growth, low interest rates and low oil prices.

The finance minister danced around the question of when the Liberals now expected to balance the books, saying only it would take “longer than expected.”

Speaking Monday, Morneau said the bad economic news is further evidence why the Liberals need to move on their plans to spur the economy.

Private sector economists consulted by the finance department now expect real GDP growth of 1.4 per cent in 2016, lower than expectations of 2 per cent laid out in the 2015 fall update.

“The economy is not just working for the middle class, and those working hard to join it,” Morneau said.
“There is no question that times are tough right now for many Canadians.”

“The time to act is now,” Morneau said.

“We will invest in Canada...We need to make smart, necessary investments that will stimulate growth, support our middle class and care for the most vulnerable members of our society,” he said.

Still, Morneau declined to say whether the worsening financial outlook would affect the Liberals’ spending plans, saying only that the budget would contain “positive surprises.”

It’s unusual for a government to release fiscal projections and deficit numbers just a month before the budget, itself, is released.

Morneau said the Liberals were seeking to be “open and transparent” about the country’s economic situation.

But the Monday announcement was likely an effort by the Liberals to get the bad news out of the way.

The finance minister took aim at the previous Conservative government, saying its “inaction” and “Band Aid” solutions left Canada vulnerable when oil prices sagged and economic growth slowed.

On the topic of federal deficits, he said the government would “solve these challenges for the long term.”

He used the analogy of a snowstorm, saying that “digging out will take time.”

Morneau said the Liberals will be launching a program to examine how the economy can best spur growth in the long-term to ensure that growth is shared equally with the middle class.