Lethbridge Herald

Ottawa has financial wiggle room: PBO

FEDERAL GOVERNMENT IN GOOD FINANCIAL SHAPE, PROVINCES NOT SO MUCH

- Lee Berthiaume and Jordan Press THE CANADIAN PRESS — OTTAWA

The federal Liberals could add billions in spending and keep federal finances sustainabl­e over the long run, Parliament’s budget watchdog says in a report that begins to set the stage for Finance Minister Bill Morneau’s upcoming budget plan.

Parliament­ary budget officer Yves Giroux says based on current policies and programs, the government could permanentl­y increase spending or reduce taxes by around $41 billion and maintain its current debt-to-GDP ratio over the long term.

That is likely good news for the Liberal government, which has been criticized by the Opposition Conservati­ves for ringing up tens of billions of dollars in additional federal debt in recent years even as it looks to introduce a new budget in the coming weeks.

Giroux told The Canadian Press in an interview the government has fiscal wiggle room to increase spending under current conditions, but warned “that could change if the government were to change program parameters or go on a spending spree of some kind or establish new programs.”

Next year’s deficit is expected to be $28.1 billion, before accounting for election promises the Liberals will unveil in their 2020 budget, such as a national pharmacare program.

Morneau told the House of Commons finance committee earlier this month that he was working through the budget to

“demonstrat­e fiscal responsibi­lity” and ensure “Canadians can meet affordabil­ity challenges.” The government doesn’t foresee a radical cut in spending, he said at the time.

“Clearly, taking a significan­t amount out of the economy rapidly would have a negative impact on growth,” Morneau said, adding a few seconds later: “It’s not a path that we intend to go down.”

The coming days will provide more inputs into the government’s calculatio­ns. Today, Statistics Canada will unveil how the economy fared in the last three months of 2019. Then next week, the Bank of Canada unveils a decision on its trendsetti­ng interest rate.

Forecasts from the bank and Giroux suggest today’s economic figures will show a slowdown, due in part to a shutdown in traffic during a CN Rail strike in November, that will spill into the first few months of 2020.

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