Canadian businessman and reality TV personality Kevin O’Leary finally, officially, announced his intention to run for Conservative leader on Wednesday, zeroing in on the Liberal government’s “dangerous proposal built on perpetual debt.”
O’Leary told Canadians and Conservative voters he will not let Prime Minister Justin Trudeau “forfeit our children’s futures under the burden of unbalanced budgets for the next 38 years, ending with a country $1.5 trillion in the hole.”
Let’s take a look at that claim. Where is O’Leary getting his information and how is he interpreting it?
Finance Canada report says Canada will have $1.5 trillion in debt by 2055
He is gleaning the figures from a report he’s previously referred to as “a buried government report.”
The report, published to Finance Canada’s website without official notice, let alone fanfare, on Dec. 23, is an update on the government’s economic and fiscal projections for the years 2021-22 to 2055-56.
There are a few things O’Leary doesn’t mention when referring to the report, which offer context to the numbers he’s repeating.
The report is a “projection” and not a “forecast.”
The report’s authors highlight the distinction, writing: “because long-term projections and the range of possible results are inherently uncertain, the baseline projections presented in this document are not intended to be forecasts.”
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In essence, there are a lot of moving parts in Canada’s economy – and predicting the state of those factors becomes increasingly difficult the farther down the road analysts try to look.
The Conservatives’ newest leadership candidate also says Canada’s unbalanced budgets will lead to the books being “$1.5 trillion in the hole.”
The Finance Canada report suggests Canada will be running a $1.5 trillion debt in 2055-56. However, the country will have a budget surplus of $26.5 billion.
But as a share of gross domestic product, the projected debt will decline throughout the projection period to 17.3 per cent from 30.4 per cent, according to the analysis.
For reference, the federal debt at the end of 2014-15 was $612 billion, and the debt-to-GDP ratio was 31 per cent, according to Finance Canada.
O’Leary says Trudeau broke his promise of balanced budgets by 2019
When O’Leary claims Trudeau broke his campaign promise of running “modest deficits” of $10 billion until 2019, at which point his government would balance the budget, he’s right.
That was Trudeau’s promise, but within months of the Liberals’ majority win, he changed his language.
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Instead of focusing on balancing the budget and eliminating deficits, he instead started to talk about lowering the debt-to-GDP ratio throughout his mandate.
Projected deficits, meanwhile, are projected to skyrocket above what Trudeau promised. The deficit for the current fiscal year, according to the government’s November economic update, will reach almost $31 billion.
As for balancing the budget by the next election, that promise is nowhere to be seen. The fall update projected a $24.2 billion deficit in 2019-20, with no sign of balancing budgets, or even a road-map toward that goal.