Minister of Finance Bill Morneau delivered the Liberal government’s first fiscal update during a news conference in Ottawa on Friday. He announced that the country’s finances have changed since the election campaign. The previous government had forecast a $2.4 billion surplus for 2015-16. The Parliamentary Budget Officer forecast a $1 billion deficit for 2015-16 in July. The Liberals are now projecting a $3 billion deficit for 2015-16.
The Liberal Party was the only party during the last election that did not promise to balance the budget in its first year. They promised to run modest deficits in order to spend on infrastructure to increase growth in the Canadian economy. When asked to clarify, Justin Trudeau indicated modest deficits meant no more than $10 billion. With down-graded forecast from the Finance Minister, the opposition parties say the government will not be able to keep to its $10 billion cap while keeping all of their campaign spending promises.
The fiscal situation closely mirrors the promises the government made on bringing Syrian refugees to Canada. We expect the government to bring 25,000 Syrians to Canada, but will Canadians be upset if they don’t arrive before January 1, 2016? The government didn’t promise to balance the budget for the first three years of their mandate. Will Canadians be upset if the budget deficit is for 2016-17 $13-15 billion as opposed to $10 billion? Do we trust the government will be able to balance the budget by 2020 if they have missed their first projection?