The federal deficit was eliminated… by the year 2045?

Photo: Christophe Ledent Getty Images
The liberals had campaigned promising a return to balance in time for the election of 2019.

Again this year, the ministry of Finance in Ottawa, is ready to play projections at a very, very long term. And his conclusion is likely to stoke the taunts of the opposition parties in the House of commons : if nothing changes over the next 40 years, the federal deficit will not be eliminated in 2045-2046, when Justin Trudeau will… 74 years.

 

The update of economic and fiscal projections in the long term is primarily intended to test the viability of the economic framework of Canada. Assuming that the current situation remains the same, the country would head towards a wall ? To this question, Finance Canada said no.

 

“These projections are similar to those that the Office of the parliamentary budget officer has published […] and also suggest that federal government finances are sustainable in the long term. “

 

But viable does not mean surplus. According to the document released on Friday (which provides the data for intervals of five years), the deficit would still be $ 10.4 billion in 2040. The ink would be black by the year 2045, with a surplus of 10.9 billion.

 

The director of communications of the minister of Finance, Daniel Lauzon, invites people to be cautious in the interpretation of these figures.

 

“It does not take into account the actions of the government,” he recalls. It is as if the government would stop functioning and that we looked at what will happen in 40 years. “

 

Uncertainties

 

For this projection, for example, the department takes for granted that the rate of growth of transfers to provinces will remain the same (3 % for social programs and a rate pegged to the GDP for the health), that program expenditures will grow — or décroîtront — at the same rate as GDP and that tax revenues from individuals and businesses will do the same.

It is a bit in the economy fiction
Alexandre Boulerice, mp néodémocrate

However, these are all of the elements on which a government is regularly. Mr. Lauzon explains that exercise is important to ” prove the reliability of the canadian tax authorities. It shows that, even if we do nothing, things return to themselves.”

 

The ministry of Finance himself indicated in his document that such projections over several decades ” are subject to a high degree of uncertainty.”

 

Economy fiction

 

In a press release, the critical conservative in matters of finance, Pierre Poilievre, mocked her, saying that this return to a balanced budget by the year 2045 occurs ” only 25 years later than promised “.

 

The liberals had campaigned promising a return to balance in time for the election of 2019.

 

“Justin Trudeau has inherited a balanced budget and turned it into over a quarter of a century of deficits. Justin Trudeau will be an old man of 74 years relaxing on a private island before the budget is balanced. “

 

The néodémocrate Alexandre Boulerice takes the figures with a grain of salt. “That, from one year to another, one passes from a return to equilibrium from 50 to 40 [years old] shows that it is a bit in the economy fiction. We will focus on over the next two years. “Nevertheless, it notes that the report predicts a slowdown of growth due to the aging of the population. “Therefore, it is feared, a certain austerity,” he says.

 

 

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