In their April budget, the Liberals promised to reduce the federal debt-to-GDP ratio in five years, and to balance the budget by the next election.
In the fiscal update published earlier this month, however, there was neither a road map to balanced books nor any indication of when the country would be back in the black.
What’s more, Parliamentary Budget Officer Jean-Denis Frechette’s analysis shows the government will have virtually no wiggle room in meeting its debt-to-GDP goal.
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Based on Statistics Canada data, the PBO figured the Liberal’s 2020-21 target will be 31.0 per cent or lower – and that the government is in line to hit exactly 31.0 per cent.
Frechette’s section on fiscal targets concludes with a message to MPs and senators, suggesting they “may wish to seek additional clarity” from the government on their commitments and plans for meeting them.
The watchdog also highlighted the fact the Liberal government has stopped producing a report the previous Conservative government began publishing in response to a recommendation from the Auditor General’s Office.
As an exercise in accountability, the 2012 auditor general’s report advised Finance Canada to publish reports taking into account long-term economic and fiscal projections, and the department started doing exactly that that same year. Reports were published annually until 2014 – there has been nothing of the sort published for 2015, and nothing yet for 2016, the PBO notes.
“Given the government’s policy actions since 2014, parliamentarians may wish to seek updated long-term economic and fiscal projections from Finance Canada,” the report reads.
Among those policy actions is the hefty sum the Liberals have pledged to infrastructure. In the fall forecast, Finance Minister Bill Morneau announced $81.2 billion more in infrastructure spending over a 12-year period.
Much of the spending, the PBO notes, will happen after the six-year forecast the government is currently operating on; only two percent, or $1.7 billion, is new money slated for the Liberal’s current mandate – and most of that is allocated for 2018-19.
The Liberal pledge to balance the books has been a moving target since the 2015 campaign trail. The economic update published earlier this month forecast deeper deficits than announced either during the campaign or in their maiden budget released just months later.
By the end of the current fiscal year, the country will be almost $31 billion in the red, according to the fall economic update – that’s $1.3 billion beyond the $29.4 billion deficit Finance Minister Bill Morneau forecast in the March 2016 budget.
The finance department’s figures released this month actually peg the 2016-17 deficit at $24.7 billion, but that takes into account a $6 billion emergency fund the Liberals announced in their maiden budget.
In fact, Tuesday’s figures indicate the Liberal government intends to move that annual envelope of $6 billion into revenues every year, effectively minimizing the projected deficit for each year.