‘Government will have to respond,’ says former budget officer ahead of federal budget

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A former assistant parliamentary budget officer says Prime Minister Mark Carney’s first budget will need to focus on investment and growth, as Canada struggles with the fallout of a trade war with the United States.

“I think it’s fair to say we’re dealing with trade that’s been weaponized by our largest trading partner,” Sahir Khan, who’s also vice-president of the Institute of Fiscal Studies and Democracy at the University of Ottawa, told CTV News Channel Sunday.

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“We’re dealing with industries and workers struggling under the weight of this, and we’re seeing incredibly aggressive industrial policy on the side of the United States. So, this government will have to respond.”

The government is expected to table its first budget Tuesday, and Khan says he’ll be watching to see whether the Liberals prioritize capital investment — infrastructure, housing and other long-term projects — over short-term spending.

“I don’t think it’s business as usual, and I’m looking for something that does really emphasize investment (and) address the growing gulf between the U.S. and Canada on business investment,” he said.

In an interview with CTV Question Period in late September, interim parliamentary budget officer Jason Jacques said Canada’s deficit, the amount of money added to the government’s total debt in a given year, was expected to rise to $68.5 billion this year, up from $51.7 billion last year.

The Institute of Fiscal Studies and Democracy (IFSD) predicts that to be higher, between $75 and $90 billion.

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Khan said this range would be “probably OK,” if it supports economic growth.

“It doesn’t leave a lot of room for a crisis in the future or for subsequent governments,” he said.

“And it really has to focus on capital and investment, otherwise we’re not going to get the pop that we really need for every dollar.”

Khan said affordability and employment will remain top concerns, particularly for industries hit by U.S. tariffs, like forestry, steel, aluminum, and canola.

“If you’re in manufacturing and you’re in technologies, you’re going to also be wondering, are we going to create an attractive climate for companies to keep their capital in Canada?” he said.

With files from The Canadian Press and CTV News’ Spencer Van Dyk