From BNN
The Trudeau Liberals are going more than $29 billion in the fiscal hole in a freshman budget that lacks a path back to balance but promises to boost economic growth by half-a-percentage point this year.
Almost $12 billion is being earmarked for infrastructure over the next five years; changes to employment insurance, and a new Canada Child Benefit form the core of the Liberal plan to carry Canada’s economy through the rough patch sown by the collapse in crude prices.
Framing the major initiatives as support for the middle class, Finance Minister Bill Morneau told the House of Commons, “Canada will not prosper if the middle class doesn’t prosper.”
The plan’s payoff, the Liberals say, is a 0.5 per cent boost to Canada’s real GDP this year and 1 per cent in 2017. The deficit spending is also forecast to create or maintain 43,000 jobs this fiscal year, and 100,000 jobs in 2017-18.
The cost is five years of multi-billion dollar deficits with no surplus on the horizon; a $29.4-billion shortfall in 2016-17 followed by a $29-billion deficit in 2017-18. Five years from now, the books will still show a $14.3-billion shortfall.
In a media conference, Morneau said he’d return to balance “over time.”
Five years of deficit spending will push the federal debt to $732.5 billion by 2020-21. Still, Morneau’s budget forecasts a gradual decline in the nation’s debt-to-GDP ratio, from a high of 32.5 per cent this coming fiscal year to 30.9 per cent by 2021.
“This government is very fortunate that its predecessors over the last two decades have gotten those debt-to-GDP numbers down to where they are now,” said Ed Devlin, head of Canadian portfolio management at PIMCO, in an interview with BNN.
