'Growth will be higher': Morneau says budget can be balanced in 5 years
Emily Chan, CTVNews.ca
Published Sunday, March 27, 2016 11:00AM EDT
Finance Minister Bill Morneau says he is confident the government's recently-unveiled budget will encourage enough economic growth to cancel out the country's deficit in "about five years."
Critics have been outspoken about the government's plan to take on approximately $30-billion in deficit this year, and say the Liberals have failed to outline exactly how they will bring the country's finances back into the black.
But speaking on CTV's Question Period, Morneau defended the government's course of action.
"We do have a plan," he said. "I don't think we're gambling at all."
Morneau pointed to the Canada Child Benefit as an example of an investment his government hopes will pay off in the long term.
The new program, which will replace the Canada Child Tax Benefit, National Child Benefit and Universal Child Care Benefit, will increase payments for most lower and middle class families. But, in general, families with a net income of more than $150,000 will receive less money.
Morneau touted these changes as a way of spurring spending in lower and middle class families.
"The signature part of our budget, which is the Canada Child Benefit … will take the amount of money we're spending on child benefits and focus it on people who really need it," he said.
"We're moving forward with putting more money in the pockets of people who will spend it. I don't think it's a gamble when you reduce taxes on the middle class."
According to Morneau, "investments" like this will jumpstart economic growth and, eventually, bring the budget back to a balance.
"We believe that growth will be higher, and we believe that we will be able to get into a balanced budget in about the five year time frame," he said. "The numbers you're seeing are a projection that we aspire to eclipse through the growth that we're going to generate."
'We had a plan'
While Morneau described the budget as a path to economic growth, opposition leaders have expressed skepticism.
Conservative Interim Leader Rona Ambrose said she believes the new budget will merely "redistribute" money without actually sparking growth.
"What I think is problematic with this budget is that … they actually said they wanted to stimulate the economy, (but) there is nothing in this budget that actually puts money out into the business sector right away," Ambrose told CTV's Question Period.
Despite Morneau's claims that the new Canada Child Benefit will encourage spending among lower and middle class families, Ambrose said it was a mistake to restructure the current benefits.
"The Universal Child Care Benefit was universal. It went to every Canadian family. And now they've scrapped that," she said. "Now it goes to certain Canadian families."
Instead, the Ambrose said the government should have stuck to the previous government's economic approach.
"There actually wasn't a problem there," she said. "We now have a government that is not focused in any way on the private sector or encouraging more private investment in our economy, which is a big concern."
The previous government did produce deficits of its own, but by April, 2015, then-finance minister Joe Oliver projected a small surplus – the first balanced budget in eight years.
Since then the state of that surplus has come under debate.
Still, Ambrose presented the former government's approach as a successful way to balance the books.
"The difference is that when we did go into deficit, we had a plan to come out," she said. "That took many, many years because it was based on the growth of the economy and the revenues coming back on stream."
Meanwhile, NDP Leader Tom Mulcair also questioned whether the Liberal approach could really lead to a balanced budget in five years.
"The Liberals have said that they're going to spend, spend, spend and then all of the sudden they're going to get back to balanced budgets," Mulcair said. "That would mean massive austerity programs to get back to that."
The NDP leader said spending on social programs is important, but questioned the way in which the Liberals have divvied up the dollars.
"We're the first to admit that when the economy goes down, you can look at stimulus spending," he said. "And yet, if we want to ensure the long term survivability of our social programs, we've got to really be smart in how we do budgets."
Mulcair said an NDP government would have increased corporate taxes to provide enough revenue to fund its spending, and criticized the government for omitting home care, childcare spaces and a national pharmacare plan from the budget.
"Right now what we're looking at is a lot of broken promises and a massive deficit," Mulcair said. "It's hard to understand how the Liberals were able to do both."