Pop quiz: what is the Liberal government’s forecasted deficit for this year?
You’re forgiven if an avalanche of dollar figures and question marks just tumbled through your brain. After all, tracking the spending promises and forecasts of this government has become a bit of a sport since the 2015 general election.
WATCH: Conservative leader Andrew Scheer says ‘massive’ Liberal deficits leave no room for contingencies
In their election platform, the Liberals made a pretty straightforward pledge:
“We will run modest short-term deficits of less than $10 billion in each of the next two fiscal years,” the platform read, adding a promise to balance the books by 2019-20.
Not only was the idea of modest deficits quickly abandoned after the Justin Trudeau Liberals won its majority in October 2015, the notion of applying any deadline to balancing spending was also dropped.
READ MORE: Liberals really can’t take much credit for reduced deficits, experts say
Asked about the prospect of balancing the budget, Finance Minister Bill Morneau this week said he is guiding his impression of the Canadian economy according to debt and, specifically, decreasing the debt-to-GDP ratio by growing the country’s GDP faster than the debt.
The position runs contrary to Liberal finance ministers from the days of yore, including Paul Martin, John Manley and Ralph Goodale, all of whom ran surplus budgets.
“When you face up to challenges of your particular era, you need to take the initiative to make sure that you balance the interest of investing in Canadians with the interest of being fiscally responsible,” Morneau said Wednesday.
The graphic below depicts six budget forecasts the Liberals have published, beginning with their election platform and ending with this week’s fiscal update. Each line represents the forecast from 2016-17 to 2020-21 from one publication, either a budget, fiscal update or the platform. The forecast published this week (in blue) shows the lowest projected deficits since November 2015. Negative numbers on the left represent the projected deficit in billions of dollars, whereas the positive numbers represent a surplus.
The forecasts
The first financial and economic outlook the Liberal government published came the same month they took office, so there wasn’t much time to change paths.
Still, the November 2015 fiscal update warned of a contracting economy, decline in GDP and a decrease in the outlook for GDP inflation (which measures the change in economy-wide prices).
Taking all of that into account, the anticipated deficit was pegged at an estimated $6 billion more than expected per year, on average, when compared to the Conservatives’ final budget published earlier that year.
WATCH: Fiscal outlook improved over $8.5B this year, Morneau says
That document was careful to include the caveat that none of the calculations and forecasts therein took into account any Liberal spending promises. (This was the actual last time an economic outlook or budget document would reference a balanced budget or surplus.)
The next big forecast came in the Liberal’s maiden budget, tabled in March 2016.
That document made it clear: lots of red ink for several years – and no plan to balance the books by 2019.
WATCH: Morneau offers no timeline on balancing books
Throughout the two years of this Liberal government, deficit projections have run the gamut; the projected deficit for 2020-2021, for example, has ranged between $6.6 billion and $21.7 billion.
Oh – the answer to the pop quiz depends on which forecast you’re looking at. The most recent one, published in this week’s economic forecast, pegged the deficit for 2017-18 at $19.9 billion (it’s been estimated as high as $29 billion, as recently as the 2016 budget).
Data for the above graph came from the Finance Canada site and the Liberal 2015 election platform:
November 2015 fiscal update.
Budget 2016.
November 2016 fiscal update.
Budget 2017.
November 2017 fiscal update.