Justin Trudeau says Liberal gov’t is fiscally responsible, blames deficit on Tories

OTTAWA – Prime Minister Justin Trudeau argued Tuesday that his Liberal government has been keeping its promise to be fiscally responsible and pointed to the previous Conservative administration as at least partly to blame for higher-than-expected deficits.

Trudeau maintained the Liberals were consistent with their 2015 election commitment to add about $10 billion in new spending for 2016-17, their first full year in office.

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But he insisted the Liberals had to deal with a baseline deficit of $18 billion after they came to power, even though their Conservative predecessors had predicted a balanced budget.

The Tories have long disputed Liberal claims that they left the country in the red following their election defeat, which came part way through the 2015-16 fiscal year.

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In trying to make his case, Trudeau revisited a bitter political debate over the post-election state of the public books that raged between Liberals and Tories long after the election.

“We just went from a floor where the budget was balanced, because supposedly the Conservatives had balanced the budget, to what was the reality of our budget of being at about $18 billion in deficit at the end of that first year,” Trudeau told a news conference.

In fiscal 2015-16, which was partly under the Conservative government and partly under the Liberals, Ottawa ended up posting a deficit of $1 billion. The Harper government had projected surpluses of $1.4 billion for that year and $1.7 billion in 2016-17.

Trudeau appeared to be referring to the 2016-17 fiscal year, his government’s first full year in office, in his claim that connected the Conservatives to an $18-billion deficit.

Full coverage: Federal Budget 2017

Each party held power for several months in 2015-16, a year marked by economic disappointment primarily linked to the weak global economy and low oil prices.

The Tories blame the eventual shortfall on fresh spending by the Liberals. They have pointed to a report last October by the parliamentary budget officer, which said Ottawa was likely on track to run a surplus in 2015-16 had it not been for new spending on measures like enriched veterans’ benefits.

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The Trudeau government has been repeatedly criticized for a budgetary outlook that projects several years of deficits, including a shortfall of $23 billion for 2016-17. The release of the final 2016-17 figures is expected in the fall.

This fiscal year, the government is predicting a deficit of $28.5 billion, including a $3-billion accounting adjustment for risk.

Trudeau’s government has also come under attack for abandoning key fiscal promises since taking office.

The Liberals won the election with a pledge to run annual shortfalls of no more than $10 billion over the first three years of their mandate and to eliminate the deficit by 2019-20.

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The prime minister refused once again, however, to say when the books would actually be balanced.

“We made the decision … in the last election that instead of focusing on balancing the books arbitrarily, and at all costs, we would focus on the investments needed to grow the economy,” he said, referring to the Liberal plan to run deficits in order to invest billions in areas like infrastructure.

The latest federal budget does not project when the deficit will be eliminated and forecasts shortfalls across its outlook, which only extends until 2021-22.

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A federal report, published on the Finance Department website in December, predicted that, barring any policy changes, Ottawa could be on a path filled with annual deficits until at least 2050-51.


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