Liberal Leader Justin Trudeau is projected to lead a second minority government as a result of the Canadian election Monday night, a decision that sets the country up for further prolonged federal spending on a range of social and economic support measures.
Global News and other broadcasters formally projected a Liberal minority win shortly before 11 p.m. ET based on the early results from voting in Atlantic Canada, Ontario and Quebec.
Trudeau had billed the election, which he triggered on Aug. 15, as a chance for Canadians to choose which party’s vision for the COVID-19 recovery they most support over the coming years.
Voters are now giving the Liberals the opportunity to keep working on their vision, which includes continued prolonged federal deficits with no plan to return to balanced budgets any time soon.
Here’s what we know.
The Liberals abandoned promises to balance the budget during their majority mandate and have instead increasingly focused on the debt-to-GDP ratio as a measure for gauging fiscal sustainability.
That ratio is what it sounds like: measuring the proportion of the federal debt against the value of the country’s Gross Domestic Product (GDP) to try to weigh whether the amount of debt carried is sustainable or problematic.
As has been the case in past years, the Liberal platform does not include any promise for getting back to balanced budgets.
Instead, it focuses on wrapping up emergency spending programs and lowering the debt-to-GDP ratio, which currently stands at roughly 48.5 per cent, to about 46 per cent in the 2025-26 fiscal year.
Prior to the pandemic, the ratio was at roughly 30 per cent.
While emergency spending ballooned during the COVID-19 pandemic due to massive social support programs like the Canada Emergency Response Benefit (CERB), the Canada Recovery Benefit, the wage subsidy, the rent subsidy and the new hiring subsidy, all of those programs are winding down this year and through 2022, though their future depends on the economic recovery.
As part of that, the federal deficit is projected to drop to $32 billion by 2026, down from the $314 billion it was at during the height of the pandemic last year.
The Liberals are promising $78 billion worth of new spending over that time period as well, with a third of that made up of the roughly $30 billion allocated for a national $10-per-day child-care program.
The COVID-19 pandemic disproportionately forced women — particularly mothers — out of the workforce and the child-care program has been billed by the government as a key part of the plan to get women back into the workforce and create more jobs.
While the Conservatives faced questions over their projection of economic growth of three per cent each year, the Liberal financial outlook anticipates more modest growth at around 1.5 or 1.7 per cent each year as Canada emerges from the pandemic.
That is in line with the parliamentary budget officer’s projections.
At the same time, their plan banks on being able to collect roughly $26 billion worth of new revenues.