Freeland promises long-awaited deficit update next week

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OTTAWA — Federal Finance Minister Chrystia Freeland will give Canadians an updated look at the country’s books next week as the government deals with economic headwinds and some big-spending new initiatives.

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“I look forward to presenting the next steps in our economic plan to deliver a good middle-class life for everyone,” Freeland said in a press release that announced the government’s fall economic statement would be revealed on Dec. 16.

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The finance minister’s long-awaited announcement comes after goading from Opposition leader Pierre Poilievre, who last week offered Freeland two hours of House of Commons time slated for Conservative motions to deliver the fiscal update.

The fiscal update will take place just two days before the House breaks for Christmas.

Freeland’s address will be closely watched as experts, including Parliamentary Budget Officer Yves Giroux, have speculated that the government will not be able to meet its previous commitment to keep the deficit below $40 billion in 2023-24. Giroux estimated in October that the Liberals would post a $46.8-billion deficit for the 2023-24 fiscal year.

Freeland’s habit of blowing through pre-announced fiscal anchors is hurting Canada’s investment climate, said Robert Asselin, a senior vice president at the Business Council of Canada.

“Unfortunately, this government has consistently failed to meet its fiscal targets and lacks a coherent strategy to foster private investment,” said Asselin, in a statement to the National Post.

“The government must use the Dec. 16th fall economic statement to prioritize effectively and adopt greater fiscal discipline.”

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Freeland wasn’t in the House during Monday afternoon’s question period but told MPs at a committee hearing that she was proud of Canada’s financial position relative to other G7 countries.

When asked by Conservative MP Michelle Rempel Garner if she expected the updated deficit numbers to lead to a credit downgrade, Freeland said the country’s finances are stable.

“Let me be very clear that I’m not confirming the implication in your question,” said Freeland, “(but) I am confident that our public finances continue to merit our triple-A rating.”

Earlier this year, RBC warned that Canada was at “a greater risk of a downgrade than other top-rated peers,” even before Freeland’s spring budget and its $40 billion deficit projection.

“Straying from fiscal budget anchors negatively impacts governments’ credibility and makes their borrowing more expensive,” wrote economist Rachel Battaglia.

The earlier projections by the government and Giroux were calculated before the Liberal government announced a massive two-month GST/HST holiday on a variety of popular consumer goods.

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The tax holiday will blow an additional $1.5-billion hole in the federal budget, according to a PBO briefing note released on Monday.

This amount excludes an additional $1.3 billion, if the five provinces that use HST refuse to waive their right to federal compensation for lost tax revenues.

Ontario Premier Doug Ford said last month that he supports the Liberal tax holiday and will not try to recoup roughly $1 billion in lost provincial revenue from Ottawa.

Freeland said in last November’s fall update she would hold the deficit at or below $40.1 billion, putting the figure forward as a fiscal anchor reigning in post-COVID spending.

She’s previously missed spending targets tied to labour market outcomes and the federal debt-to-GDP ratio.

Freeland’s boss, Prime Minister Justin Trudeau, said upon taking office in 2015 that he’d run a deficit of $10 billion or less in each of his first three years and balance the budget by year four.

Yet Trudeau never managed to bring Ottawa’s finances out of the red, overseeing under his watch a doubling of federal debt to roughly $1.2 trillion, as of August 2024.

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Freeland wasn’t in the House on Monday to answer questions about next week’s update.

National Post
rmohamed@postmedia.com

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