Trudeau casts doubt on Liberals’ balanced-budget vow, cites fading economy

Prime Minister Justin Trudeau is backing away from a campaign vow to balance the public books before the end of his government's four-year mandate — a pledge that was central to the Liberal election platform.

OTTAWA — Prime Minister Justin Trudeau is backing away from a campaign vow to balance the public books before the end of his government’s four-year mandate — a pledge that was central to the Liberal election platform.

As a result of a weakening economy, the government’s upcoming 2016-17 budget plan will show a deficit larger than the Liberals’ promised $10-billion shortfall cap, Trudeau told Montreal’s La Presse newspaper.

Just how big that deficit will be remains unclear.

If the economy continues to deteriorate, it will be difficult for the Liberals to live up to their pledge to balance the books in 2019-20, Trudeau said in the interview published Thursday.

Less than two months ago, Trudeau insisted that the Liberal plan to make good on that key balanced-budget promise was “very” cast in stone.

The doubts raised by Trudeau offer a glimpse of the fiscal pressure faced by the Finance Department as it crafts the government’s first federal budget, expected late next month.

“If we look at the growth projections for the next three or four years, it will be difficult (to return to balance),” Trudeau was quoted by La Presse as saying.

“But everything we’re doing is aimed at creating economic growth. When predicting the level of growth four years in advance, governments often miss the target.”

Trudeau said the Liberal government still intends to fulfil its other, more flexible “fiscal anchor” — lowering the debt-to-GDP ratio in every year of its mandate.

By zeroing in on debt-to-GDP, economists say the Liberals could run annual deficits of up to $25 billion in the coming years and still push the ratio downwards, as long as the economy grows at a decent pace.

The Liberals have promised to run deficits in the coming years in order to be able to spend billions on projects like infrastructure, which they predict will create jobs and help revive the economy.

Along with infrastructure spending, the Liberals have also pointed to their other economy-boosting plans. They include cutting taxes for middle-income earners — offset in part by raising taxes on the highest earners — and revamping child benefits so they help more families.

Those measures, however, will lower revenues destined for the public treasury over the coming years.

At a news conference later Thursday, Trudeau dodged questions about whether his government would be able to balance the budget in four years.

“We continue to recognize that the Canadian economy is facing real challenges in terms of growth, in terms of jobs for the middle class,” Trudeau said after a meeting with UN Secretary General Ban Ki-moon.

“Our entire framework is about turning around the low-growth rates that Canada has been facing. And we’ve seen, with falling oil prices, that there is a trajectory that continues to look difficult for Canada.”

Ottawa’s goal is to generate the kind of growth that will benefit not just the federal balance sheet, but the entire economy, he added.

During the fall election campaign, Trudeau promised to keep deficits below the $10-billion mark in 2016-17 and 2017-18 unless the economic situation got radically worse.

“Yes, we will go over $10 billion,” he told La Presse. “By how much? We are in the process of examining that.”

Interim Conservative leader Rona Ambrose blamed “out-of-control Liberal spending” for breaking the $10-billion deficit promise.

“Unfortunately, it is today’s Canadian families — and generations to come — who will pay the price for Liberal mismanagement,” Ambrose said in a statement.

In recent months, the Canadian economy has sputtered in large part due to the steep drop in commodity prices.

On Wednesday, a National Bank of Canada report said the country’s fading economic prospects could put the Liberal government on track for $90 billion in deficits over its four-year mandate.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

The union representing workers at the Olymel meat processing plant in Red Deer confirmed the death of a worker on Wednesday. (Advocate file photo)
Union confirms death of worker from Olymel plant

An investigation by the UFCW 401 local has confirmed a fourth death… Continue reading

Sunterra Market is preparing to open at Bower Place. (Photo from Facebook)
Sunterra Market to open in Red Deer in March

Bower Place to welcome grocery shoppers

Weather brief (Photo by LANA MICHELIN/Advocate staff).
Red Deer experiences driest winter in 99 years

The city only had 9.6 millimeters of precipitation between December and February

The number of positive cases of COVID-19 has been climbing up since Jan. 20 at Red Deer's Olymel meat processing plant. (File photo by Advocate Staff)
Some Olymel workers return for training, plant reopening date not set

Union calls for delay of opening as workers fear for safety

Conservative leader Erin O’Toole holds a press conference on Parliament Hill in Ottawa, Tuesday, March 2, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Conservative MP David Sweet joins chorus calling for end to COVID-19 restrictions

OTTAWA — A Conservative MP has joined the chorus of voices calling… Continue reading

The Onslow Belmont Fire Brigade is seen in Lower Onslow, N.S., Wednesday, April 22, 2020. The RCMP says two officers who fired towards a civilian and another RCMP officer during last year’s mass shooting will remain on administrative duties until internal inquiries are completed .THE CANADIAN PRESS/Andrew Vaughan
N.S. RCMP who shot at firehall on administrative duty during internal reviews of case

HALIFAX — The RCMP says two officers who fired towards a civilian… Continue reading

Prime Minister Justin Trudeau rises during question period in the House of Commons on Parliament Hill in Ottawa, Wednesday, Feb. 24, 2021. Efforts to increase Canada's ability to produce vaccines is among over 100 projects receiving new federal money. THE CANADIAN PRESS/Sean Kilpatrick
Over 100 new projects to get $518 million in federal research funding

OTTAWA — Efforts to boost Canada’s ability to produce vaccines are among… Continue reading

Hassan Diab, whose allegations of involvement in a 1980 synagogue bombing were dismissed by French judges for lack of evidence, listens during a press release on the release of an external review on his extradition by the Justice Department on Parliament Hill, in Ottawa, Friday, July 26, 2019. Prime Minister Justin Trudeau is signalling that Canada will stand up for Diab, an Ottawa sociology professor facing trial in France, following calls from human-rights advocates to intervene. THE CANADIAN PRESS/Justin Tang
Trudeau signals support for Hassan Diab as Ottawa professor appeals case in France

OTTAWA — Prime Minister Justin Trudeau is signalling Canada will stand up… Continue reading

NDP MP Niki Ashton stands during question period in the House of Commons on Parliament Hill in Ottawa, Thursday, April 26, 2018. Two prominent Jewish advocacy groups are voicing anti-Semitism concerns ahead of a public conversation between NDP MP Niki Ashton and former U.K. Labour leader Jeremy Corbyn. THE CANADIAN PRESS/Sean Kilpatrick
Jewish groups raise anti-Semitism concerns ahead of NDP MP’s chat with Corbyn

OTTAWA — Two prominent Jewish advocacy groups are voicing concerns about anti-Semitism… Continue reading

Major-General Dany Fortin, left, looks on as Minister of Public Services and Procurement Anita Anand provides an update on the COVID-19 pandemic, in Ottawa, Tuesday, Dec. 15, 2020. The Public Health Agency of Canada has set aside up to $5 billion to pay for COVID-19 vaccines. THE CANADIAN PRESS/Sean Kilpatrick
Public Health Agency of Canada budgets $5B for COVID-19 vaccines, treatments

OTTAWA — The Public Health Agency of Canada expects to spend up… Continue reading

A vial of Oxford-AstraZeneca COVID-19 vaccine is pictured at a family doctor office, Thursday, Feb. 25, 2021 in Paris. THE CANADIAN PRESS/AP -Christophe Ena
Trudeau ‘optimistic’ that timeline for rollout of COVID vaccines can be accelerated

Prime Minister Justin Trudeau expressed optimism Wednesday that his government’s timeline for… Continue reading

UCP MLA for Lacombe-Ponoka Ron Orr. (File photo)
MLA Ron Orr: Benchmarks were achieved but goalposts were moved

Orr responds to concerns, calls on province to fully open Step 2

Most Read