With no end to federal deficits in sight, budget spells dismay for some economists
With no end to federal deficits in sight, budget spells dismay for some economists
OTTAWA -
Even as the Liberals keep a tight focus on new clean-tech and health-care spending, the federal budget released Tuesday still projects deficits for the next five years.
Many economists are expressing disappointment in those fiscal projections, noting the government could be in trouble if the economy slows more than it is expected to -- and saying the Liberals could've saved themselves headaches with better planning in previous years.
Finance Minister Chrystia Freeland promised that Tuesday's budget would be fiscally restrained in light of a slowing economy that could weigh on government coffers.
And Prime Minister Justin Trudeau insisted on Wednesday that the government remains "fiscally responsible."
But the fiscal projections in the budget show the deficit has been revised upward since the fall, showing no end in sight for deficits despite the fall budget update in November projecting a balanced budget in 2027-28.
"The idea that you're not even getting to a balanced budget within this budget horizon, is, in my mind, not fiscally responsible," said James Orlando, TD's director of economics.
Tuesday's budget forecast a $14 billion deficit in 2027-28, and higher deficits each year than had previously been projected.
As to whether the budget stayed true to Freeland's promise of fiscal restraint, former parliamentary budget officer Kevin Page likened restraint to beauty.
"It's in the eye of the beholder," he said.
Page, who heads the Institute of Fiscal Studies and Democracy, said it's not surprising that the deficit is higher than what was forecast in the fall, given that the economic outlook has since worsened.
The budget's economic projections, which are based on a survey of private-sector economists, show the economy slowing more than what was anticipated in the fall. The federal government is now expecting a shallow recession this year as high interest rates weigh on growth.
That means less tax revenue to finance the federal government's spending priorities. And if the economy slows more than expected, the federal government is at risk of running even larger deficits.
In a news conference on Wednesday, both Freeland and Trudeau defended their handling of federal finances.
"We remain fiscally responsible, even as we're investing for a better tomorrow," Trudeau said.
Freeland cited a new report by former Bank of Canada governor Stephen Poloz, which says the budget could take pressure off of the inflation situation by increasing the economy's capacity.
"Given that the demand side of the economy is already slowing sharply and most of the effects of last year's increases in interest rates have yet to appear, it is even possible that Budget 2023 will help improve the odds of a soft landing in the economy, by buffering demand and boosting supply," Poloz wrote.
"Given the complexity of the situation, and the uncertainty around the outlook, it is simply too close to call."
While the budget announced nearly $60 billion in new spending, much of it went toward investing in clean energy and technology, as well as health care.
Page said it's "hard to criticize the government's priorities."
The Liberals were facing pressure to match U.S. incentives for clean energy and technology, while also on the hook for health-care spending and creating a federal dental plan promised in the supply-and-confidence agreement with the NDP.
But looking back, the federal government had the opportunity to better position itself by pulling back on spending in previous budgets, he said.
"We could have saved a little bit," Page said. "So yeah, we find ourselves in a situation where there's not a lot of money in the till right now."
Canada is not the only country that has allowed serial deficits in recent years. The United States has run a deficit for 20 years in a row. In the U.K., the last time a government ran a surplus was in 2000-01.
Orlando said that in recent years, governments running deficits were able to benefit from low interest rates. But as interest rates now rise, the tides are turning on the costliness of debt.
And continuing to increase spending without being able to finance it with higher revenue can build bad habits, Orlando said.
It's like with a "regular person," he said, who gets used to spending on something every year without consequence. "It's hard for them to rein that in, once they realize that their incomes aren't able to match up," he said.
This report by The Canadian Press was first published March 29, 2023.
Prime Minister Justin Trudeau's efforts to assure Canadians that his government is adequately addressing the threat of foreign interference took a hit on Wednesday, when the majority of MPs in the House of Commons voted for special rapporteur David Johnston to 'step aside,' a call Johnston quickly rejected.
A New Democrat MP is trying to convince his colleagues to change the rules that govern the House of Commons in a series of ways he says would instill 'democratic controls' on the prime minister's 'unfettered' powers.
Monday morning, the Public Service Alliance of Canada announced it had reached a 'tentative' agreement with the federal government for the 120,000 picketing Treasury Board workers who, since April 19, had been engaged in one of the largest strikes in Canadian history. Here's a rundown of the developments from Parliament Hill as they happened.
The House committee studying foreign election interference heard from top 2019 and 2021 Liberal and Conservative campaign directors on Tuesday, with party officials from both camps speaking about the need for politicians to come together to address any "legislative gaps" ahead of the next vote.
In the 2023 federal budget, the government is unveiling continued deficit spending targeted at Canadians' pocketbooks, public health care and the clean economy.
Danielle Smith's win in the Alberta election hands her the most starkly divided province confronting any premier in Canada, writes commentator Don Martin.
Special rapporteur David Johnston didn't recommend public inquiry knowing it was a pathetically insufficient response for a foreign democratic assault of this magnitude, writes Don Martin in an exclusive column for CTVNews.ca.
To frame a few new illustrations on pages tucked inside a passport as proof of a Liberal plot to purge the Canadian historical record seems like a severe stretch, writes Don Martin in an exclusive column for CTVNews.ca.
Public Safety Minister Marco Mendicino is a bright former federal prosecutor, who was destined to be a star in Justin Trudeau's cabinet. But in an opinion column on CTVNews.ca, Don Martin argues Mendicino has taken a stunning fall from grace, stumbling badly on important issues just 18 months into the job.
It's the most peculiar of elections with the frontrunner and her main opponent being the same person, writes columnist Don Martin. 'In the looming Alberta showdown, it's Premier Danielle Smith versus her mouth.'
Photos show smoke-filled skies in cities across Canada and the U.S. as air quality warnings were issued in wake of the hundreds of wildfires from Quebec and Ontario.
With the latest hike bringing Canada's key interest rates to levels not seen since 2001, one mortgage broker is warning that it may be 'the last straw' for some homeowners with variable mortgages.
Canadians are twice as likely to support a formal inquiry into foreign interference, as opposed to public hearings, according to new polling from Nanos Research for CTV News.
It's been a busy, tumultuous few days for Prince Harry, the Duke of Sussex as he took his place on the witness stand in his trial against the Mirror Group Newspapers. Here are royal commentator Afua Hagan's top takeaways from his two-day grilling.
The man who was found not criminally responsible in the stabbing deaths of five people at a house party in Brentwood more than nine years ago is seeking more freedoms.
Prime Minister Justin Trudeau is showing no interest in compromising with Meta and Google over a Liberal bill that would make them pay for Canadian journalism that helps the companies generate revenue.
In a courageous display of resistance, a group of Afghan women activists danced in Kabul as a form of protest in a country where women are banned from attending school, work and even going to parks.
An Ontario man has been charged with first-degree murder in the death of Claudia Iacono, the daughter-in-law of Mafia associate Moreno Gallo, after she was gunned down at the wheel of her car in Montreal last month.
The man who was found not criminally responsible in the stabbing deaths of five people at a house party in Brentwood more than nine years ago is seeking more freedoms.
Thousands of Canadians have had to leave their homes in several provinces over the last few weeks due to forest fires. Luckily, there are steps you can take to protect your property, both prior to an evacuation and during.
A northern Ontario forest fire that started west of Sudbury on Sunday morning has grown to more than 1,000 hectares and has prompted officials to issue an evacuation order for the immediate area as the number of active fires in the region grows.
Poor air quality is forecast to persist into the weekend across parts of Ontario, as plumes of wildfire smoke blanket the province and prompt school boards to limit outdoor activities.
In a courageous display of resistance, a group of Afghan women activists danced in Kabul as a form of protest in a country where women are banned from attending school, work and even going to parks.
A missing-persons activist in western Mexico said Wednesday that call center workers have been going missing in Mexico since at least 2017, and that authorities have done little to solve the cases.
More top officials could soon follow the foreign minister in quitting to compete for the presidency, President Andres Manuel Lopez Obrador said on Wednesday, as the race to succeed him begins to thin out the government.
A group of climate activists claimed responsibility on Wednesday for deflating the tires of sport utility vehicles in Denmark's capital. More than 100 vehicles were vandalized, police said.
Greek officials have launched a series of high-level contacts with the newly elected government in Turkiye in an effort to counter a surge in attempted crossings by migrants over a river that divides the two countries.
Canadians are twice as likely to support a formal inquiry into foreign interference, as opposed to public hearings, according to new polling from Nanos Research for CTV News.
Hazy skies tinged with an eery yellow glow greeted millions of Canadians in Quebec and Ontario again Wednesday as the smoke from hundreds of wildfires continued to cause air quality warnings in Canada's most populated corridor. In a bizarre twist of fate, on a day when air quality was among the worst the country has ever seen, it was national Clean Air Day in Canada.
Prime Minister Justin Trudeau is showing no interest in compromising with Meta and Google over a Liberal bill that would make them pay for Canadian journalism that helps the companies generate revenue.
Being a 'sleep procrastinator' might not only make you grumpy the next day, it can put your health at risk. A sleep expert shares tips for making sure bedtime is shut-eye time.
Two people died in what officials believe was a mass fentanyl overdose over the weekend involving five people in a hotel room in the Hawaii tourist mecca of Waikiki.
Federal safety regulators are urging consumers to stop using baby pillows that have been linked to 10 infant deaths but are still being sold on Facebook Marketplace, despite being recalled two years ago.
The James Webb Space Telescope set its sights on a galaxy 20 million light-years away, capturing a dazzling star-forming galaxy in images streaked with the signature of passing asteroids.
Reporters are a skeptical bunch, so it was unusual to hear so many of them raving about their firsthand experience with Apple's next Big Thing: the high-priced headset called Vision Pro, a device infused with totally virtual reality as well as augmented reality that projects digital images on top of real-world settings.
The Canadian military has confirmed it participated in a May 2023 forum for Five Eyes intelligence partners that was held by the director of the Pentagon's UFO research program.
Former Fox News host Tucker Carlson released the first episode of his new show on Twitter on Tuesday, weeks after being taken off the air by the network following a damaging defamation lawsuit over false claims of election fraud.
CNN ousted chief executive Chris Licht after a tumultuous year leading the struggling news network that culminated in a damning magazine profile and the growing realization that he'd lost the confidence of the network's journalists.
With the latest hike bringing Canada's key interest rates to levels not seen since 2001, one mortgage broker is warning that it may be 'the last straw' for some homeowners with variable mortgages.
Montana became the first state in the U.S. to enact a complete ban on TikTok on Wednesday when Republican Gov. Greg Gianforte signed a measure that's more sweeping than any other state's attempts to curtail the social media app, which is owned by a Chinese tech company.
Years ago, when my now-grown daughter Justine was a toddler, we visited a U-pick farm where she plucked plump, ripe strawberries from a field of sprawling plants. Some made it into the basket on that sunny June day; others went directly into her mouth.
On the eve of the RBC Canadian Open, news of a merger between the PGA Tour, European Tour and LIV Golf shocked the golf world -- including one of Canada's best players.
Insurance industry group Equite Association says vehicle theft in multiple provinces surged last year. Vehicle theft was up by 50 per cent in Quebec year over year, by 48.3 per cent in Ontario, by 34.5 per cent in Atlantic Canada and by 18.3 per cent in Alberta.
Ontario has committed to paying a third of the cost to save a $5-billion electric vehicle battery plant in Windsor, Ont., premier Doug Ford said Thursday.
Former Formula One boss Bernie Ecclestone on Tuesday formally pleaded not guilty to a fraud charge over his alleged failure to declare millions of dollars held in a trust in Singapore to Britain's government.
