October 19, 2018 12:34 pm
Updated: October 19, 2018 12:57 pm

Federal deficit stays virtually the same at $19B this year

Prime Minister Justin Trudeau speaks during question period in the House of Commons on Parliament Hill, in Ottawa on Tuesday, Oct. 16, 2018.


The federal government ran a shortfall of $19 billion in the last fiscal year, virtually unchanged from the previous year, Ottawa’s annual financial report card shows.

The deficit for 2017-18 was slightly smaller than the federal government predicted in February’s budget.

READ MORE: Ontario deficit will jump to almost $12 billion in 2018: FAO

However, the Finance Department’s fiscal monitor estimated in May the federal books would post a deficit of just $16.2 billion for last year.

Story continues below

To confuse matters, the government says it has changed the way it calculates its pension liability – a fix officials say has been at the top of the list for auditors for years. And that led to revisions of 10 years’ worth of budget numbers.

As a result, the slim surplus Conservatives left with much fanfare in 2014-15 is now noted as a small deficit.

Tax revenues rose year-over-year, but it was less a windfall than what officials described as a “new normal” after the Liberals created a new tax bracket for high-income earners. The Finance Department says there was a $9.9-billion increase in personal tax revenue from the previous year.

READ MORE: New report calls Liberals’ 2016 tax hike ‘revenue loser on a national scale’

Beyond 2017-18, Morneau’s February budget predicted an $18.1-billion shortfall for this fiscal year – a number that’s expected to gradually shrink to $12.3 billion in 2022-23, including annual $3-billion cushions to offset risks.

Following the 2015 election, the Liberal government abandoned campaign pledges to run annual deficits of no more than $10 billion and to balance the books in four years – by 2019.

Instead, Morneau has been focused on reducing the net debt-to-GDP ratio – also known as the debt burden – each year. After the pension-related revisions were taken into account, the debt ratio dropped to 31.3 per cent of GDP in 2017-18, from 32.0 per cent a year earlier.

The latest numbers for 2017-18 pushed the overall national debt to $671.3 billion.

The document didn’t provide a long-term outlook for the debt burden, but officials say internal projections still show the measure on a downward track, even if the numbers have shifted slightly due to accounting changes.

WATCH:  How PST and income tax changes will affect Canadians

Morneau has cited a weaker-than-expected economy for the bigger shortfalls as well as a need to make investments to lift Canada’s long-term growth.

But the economy has delivered a strong performance for more than a year and the lack of a road map to return to balance has drawn criticism, particularly from the opposition Conservatives.

There are concerns over the Liberals’ deficit-spending plan at a time of economic expansion and warnings it could find itself far deeper down the deficit hole in the event of a recession.

© 2018 The Canadian Press

Report an error


Want to discuss? Please read our Commenting Policy first.