Liberals shelled out $62.9 billion in ‘unprecedented’ first quarter, says budget watchdog

Prime Minister Justin Trudeau makes an infrastructure announcement at a municipal bus depot in Montreal. The Liberal government spent $62.9 billion in the first quarter of 2016,. Ryan Remiorz / The Canadian Press

The Liberal government started the 2016-17 fiscal year off with some “unprecedented” spending, the federal budget watchdog revealed on Thursday.

A new report released by the parliamentary budget officer says spending was 5.7 per cent – almost $3.4 billion – higher in the first quarter compared with the same period last year, when the Conservatives were still in power. That’s the highest mark for first-quarter expenditures in at least six years, the PBO notes.

In 2012-13, for example, first-quarter expenditures sat at $55 billion.

Overall, expenditures reached $62.9 billion over the three-month period, with much of the increase due to a 19 per cent spending boost tied to infrastructure.

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“Budget 2016 outlined $5.3 billion in investment in housing and infrastructure in 2016-17, the majority of the funds as grants and contributions,” the report states.

“In accordance, the first quarter has observed a large increase, $1.22 billion, in grants and contributions, which have been disbursed at a rate unprecedented compared to recent years.”

Many of the transfers have been to First Nations for infrastructure purposes and to other levels of government, the PBO adds.

Of the $62.9 billion, $21.1 billion was “direct program spending,” which includes things like contributions, grants and basic operating costs. This is the total that tends to fluctuate most depending on each government’s policy plans, the PBO notes.

Another $5.7 billion went to public debt charges, which have stayed comparatively low as a result of low interest rates.

Major transfers to other levels of government (such as the Canada Health Transfer and the Canada Social Transfer) made up $16.8 billion, and the remaining $19.4 billion in expenditures went to “major transfers to persons.” That includes things like Old Age Security benefits, the Universal Child Care Benefit and Employment Insurance payments.

The increase in expenditures is not entirely unexpected, as the government had promised big stimulus spending over the next few years. Prime Minister Justin Trudeau has argued it will help jump-start the Canadian economy, and the federal budget for 2016-17 includes an expected deficit of over $29 billion as a result.

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The Opposition Conservatives, meanwhile, have argued that while the economic situation justifies some stimulus spending, the government should target that spending to ‘depressed regions’ like Alberta’s oil patch.

The budget office, which is responsible for providing independent financial advice to Parliament, also says the government’s operating spending increased 3.6 per cent in the first quarter compared to a year before, despite a decrease in employee costs.

With files from the Canadian Press.

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