Finance Minister Chrystia Freeland has given the strongest signal yet that her government will blow past its most recent deficit target
Robert Asselin is senior vice-president, policy, at the Business Council of Canada and a former adviser to two prime ministers.
In October, the Parliamentary Budget Officer said the government was already on track to miss that target, putting the deficit atWhile declining to commit to most of the fiscal-anchor pledges, Ms. Freeland said the government would meet the debt-to-GDP-ratio target of 42.1 per cent. What Ms. Freeland didn’t say was that GDP came in $45-billion more than expected. So, using the same ratio, that implies a deficit of up to $60-billion for the last fiscal year.
Canada’s deficit is not merely a number; it is a reflection of systemic overspending and a lack of fiscal foresight. Unlike deficits incurred during times of national crisis, this shortfall is largely structural, driven by spending commitments that were neither time-limited nor adequately funded. Programs rolled out with little regard for sustainability have locked the government into perpetual increases in expenditure.to defence.
The problem with this strategy – manifest with the latest GST temporary exemption on certain goods – is that it stimulates consumption without addressing underlying productivity challenges. Meanwhile, the rising debt burden limits Canada’s ability to act during future economic slowdowns and unforeseen circumstances.
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