Over the past several months, our Conservative opposition has been relentlessly questioning the Liberal government on its plan to run significant long term deficits.
Last week, the Finance Minister confirmed that the deficit would be at least $18 billion and did nothing to ease concerns that it could rise as high as $30 billion by the end of the year.
Considering the federal budget was in surplus as recently as December 2015, this minimum $18 billion deficit is a shocking turn in Canada’s federal fiscal position.
The Liberals are trying to spin their huge deficit by saying that without running up the federal credit card tab, program spending would have to be cut.
This is simply false.
For the first nine months of 2015, federal government revenues increased from $197,867,000 to $212,064,000. That represents an increase in revenues of 7.1%. This rate far exceeds that of population growth and inflation.
The Liberals did not inherit a revenue problem, but in four months created a spending problem.
While there is reasonable justification for running a deficit in a time of national economic contraction to offset declining demand for goods and services, Canada’s economy, with the exception of energy producing provinces, is growing.
The Bank of Canada expects Canada’s GDP to grow by 1.9% in 2016 and 2.5% in 2017.
Ultimately, international interest rates will rise and the federal government will have to dedicate an increasing share of its overall spending towards payments on our debt. This will lead to a combination of reduced spending on the things we care about because they are being squeezed by debt payments and tax hikes.
I’ve included links to all the sources for figures used in this MP Report.
Have a wonderful, safe weekend.