Deputy Prime Minister and Minister of Finance Chrystia Freeland joins Prime Minister Justin Trudeau as they participate in a virtual discussion from Ottawa on Monday, May 3, 2021, with seniors from Residence Memphremagog in Magog, Quebec. THE CANADIAN PRESS/Sean Kilpatrick

Federal budget ‘overstates’ economic impact of stimulus spending, budget officer says

OTTAWA — Parliament’s spending watchdog says the federal Liberals’ budget overestimates how much of an impact its stimulus measures will have on Canada’s economy.

The budget last month outlined what the government said was $101.4 billion in new spending aimed at helping the country climb out of the economic hole caused by the COVID-19 pandemic.

But the budget officer’s report today notes that only $69 billion of that spending could be considered stimulus.

Yves Giroux says that spending would boost economic growth by one per cent next year, and create 74,000 jobs, compared with the budget’s estimates, respectively, of two per cent and 334,000 jobs.

He goes on to say that the higher deficits and debt in the coming years could limit the ability of a government to introduce any new, permanent programs without spending cuts or tax increases.

Giroux’s report lands hours before Finance Minister Chrystia Freeland is scheduled to kick off debate in the House of Commons on the government’s budget bill introduced last Friday.

The minority Liberal government would fall without the support of at least one other major party to pass the budget bill, leading to a process that would likely trigger an election campaign.

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