Federal Finance Minister Bill Morneau suggests he has no plans to provide a timetable for returning Ottawa’s books to balance — even with a scorching economy.
Morneau credited the strong economic performance to the Trudeau government’s strategy to run deficits, which helped it finance measures such as lower income-tax rates for middle earners and enhanced child benefits.
Moving forward, he said Tuesday that Ottawa intended to pursue its plan to invest more than $180 billion into infrastructure over the next 11 years. That spending is projected to contribute to annual, multibillion-dollar shortfalls across Ottawa’s five-year budgetary outlook — and perhaps beyond.
Morneau’s remarks outside a cabinet retreat in St. John’s came after months of impressive economic data, including a recent report showing growth expanded at an annualized rate of 4.5 per cent in the second quarter.
“We find ourselves in this positive position because of the economic approach we’ve taken,” he told reporters after being asked if the improved fiscal outlook meant he’d produce a timeline to eliminate the deficit in his fall economic update.
“We’re going to continue down that path and we’re going to do it in a fiscally responsible way.”
The Liberals’ deficit track has faced criticism.
Conservative opponents have long been critical about the government’s plan to add to the federal debt to fund new measures, while some economists have urged Ottawa to limit fiscal uncertainty by mapping out a plan to return to balance.
More recently, experts have also warned that Ottawa should consider delaying its nearer-term infrastructure investments to avoid the risk of overheating the already-sizzling economy.
Boosting the economy
The economy’s surprisingly powerful start to the year is expected to improve the federal bottom line outlined in the government’s March budget.
At the time, Morneau forecasted a $28.5-billion deficit for 2017-18, including a $3-billion accounting adjustment for risk.
A new analysis released this week by a University of Ottawa think tank predicts the deficit is on track to be about $6.5 billion smaller this year. The shortfall is set to shrink thanks to an economic expansion that easily topped federal projections, said the Institute of Fiscal Studies and Democracy.
The think tank, led by former parliamentary budget officer Kevin Page, also said there’s “little doubt” the federal measures, such as increased child benefits and early infrastructure…