Even if Prime Minister Justin Trudeau wins a second majority mandate in the fall, his government has no plan to return the federal books to balance.
Released on Tuesday, Budget 2019 lays out a plan for $4.2 billion in new, unannounced spending but keeps federal accounts in deficit until at least 2023-2024.
Federal debt last year stood at $19 billion and decreased to $14.9 billion in the fiscal year ending on March 31, 2019. But going forward, the deficit is set to dive again to $19.8 billion next year and $19.7 in 2020-2021.
READ MORE: Federal budget 2019 coverage
At the same time, the Canadian debt-to-GDP ratio will remain among the lowest of the countries in the G7 even while it remains stubbornly above where the Liberals promised it would be in their 2015 campaign platform.
In that platform, the Liberals had pledged to get the debt-to-GDP ratio below 27 per cent by 2019.
Instead, it was at 31.3 per cent last year and will hit 30.8 in the fiscal year ending on March 31.
It will drop by a fraction to 30.7 per cent in 2019-2020, 30.5 per cent in 2020-2021, 30 per cent in 2021-2022, 29.3 per cent in 2022-2023 and then 28.6 per cent in 2023-2024.
That means the Liberals will not hit their 2015 campaign debt-to-GDP ratio target even by the time they finish a second majority mandate, if they are re-elected in the fall election.
While that ratio might not seem as bad as some other countries, economists say the lack of action to get it down to where the government had promised could be a risk combined with other demographic changes facing Canada in the coming years.
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“The government, from a demographic perspective, needs to get its fiscal house in order,” said Don Carson, a partner with the Toronto accounting and consulting firm MNP.
He pointed specifically to the aging Baby Boomers, their anticipating draw on social services and the diminishing tax base the government will have as older Canadians opt out of the workforce.
All of those will likely see provinces requiring more money in transfer payments and less revenue coming into government coffers, making continued deficit levels risky in the longer term.
“There is likely a train wreck coming at some future point. … We really need to get to a period where we are eliminating the federal deficit partly because we’d be passing these costs on to future generations.”
As well, economists are not ruling out a recession within the next 12 to 18 months, which could impact the underlying projections the budget is based on.
The government is predicting GDP growth of 1.8 per cent over the next year.
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Private sector economists, on the other hand, are forecasting growth between 1.4 and 1.2 per cent and warning of the potential for a downturn around fall or winter of this coming year.
Beata Caranci, chief economist at TD Bank, said while Budget 2019 seems to be prudent for the current economic situation, it may not have the wiggle room needed to cope with a shock.
“If we were to get any kind of external shock … we don’t have a lot of cushion there,” she said.
An external shock could come in the form of serious threats to ratifying the new NAFTA deal, a loss of confidence in the stock market or broader fallout of a US-China trade war.
The government does have a contingency fund built into the budget worth $3 billion.
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Yet uncertainty is a key theme in the budget, even earning its own preface in the budget document.
Carson noted much of the budget is focused on helping Canadians ride out economic uncertainty in their own lives in terms of housing costs and support for job training in a changing economy.
But he added there seems to be less focus on doing the same for the government books.
“We’re basically handing the bill not just to the next generation but the generation after that,” he said. “I believe that there will be a price to pay at a future point.”
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