Morneau defends rising deficit
• As debut performances go, Finance Minister Bill Morneau managed to stick close to the Liberal script on the need for deficitfuelled stimulus spending, and avoided any major policy pratfalls, in his first appearance before Canadian lawmakers.
While such events usually provide fodder for heated partisan debates, Morneau’s testimony to the House of Commons finance committee on Tuesday drew only limited criticism from the all- party committee, with the only real grilling coming — not surprisingly — from the Conservative finance critic, who demanded to know how the new Trudeau government managed to turn a Tory surplus, although meagre, into a multibilliondollar deficit.
In his opening statement, Morneau said the government’s 2016-17 budget, to be tabled on March 22, will “create conditions for growth.” Those i nclude campaign promises to sweeten child benefits and provide tax breaks for middle-class Canadians.
Already, the Liberal government is preparing Canadians for a string of deficits over its four- year mandate, beginning with a shortfall of at least $ 18.4 billion in the coming fiscal year — not counting spending on infrastructure projects and other new programs, which many economists say will likely push the total shortfall to as much as $30 billion.
“There will be more to do,” Morneau said. “Over the coming months, the government will develop a robust growth strategy designed to deliver strong and sustainable growth that will benefit us all, and higher living standards for all Canadians. And we will deliver that strategy before year-end.”
Much of that work will fall to the newly created Advisory Council on Economic Growth, chaired by Dominic Barton, the head of global consulting group McKinsey & Co. “Their first job will be finding ways to increase our productivity,” Morneau said. “So, as our demographics shift, we nonetheless continue to enjoy the highest possible standard of living. This is long overdue.”
Morneau said other political parties “who committed during the last election campaign to a balanced-budgetat-any- cost approach would be making cuts of tens of billions of dollars at precisely the wrong time.”
“This would have led to massive job losses in a time of already high unemployment. This would have led to program cuts at a time when regions and population segments need those programs most,” he added. “To be frank, this would have likely led us into another recession.”
But committee member Lisa Raitt, the Conservative finance critic, defended the Harper government’s handling of the economy, telling Morneau that “we handed you a surplus, Minister, in November and December of this year when you took over.
“You are eroding the surplus that was handed to you by a Conservative government, and that any deficit for the year 2015-2016 is clearly on the hands of your government.”
Morneau, however, strongly rejected that reading of the federal government’s fiscal position.
“In the last two months of the year, we have a reduction in revenues and an increase in expenses. What that leads to is a situation where you cannot look at one half of the year, and certainly you cannot look at one month or another month and come to any conclusions about our situation,” he said. “We took a look at the finances left us by the previous government and we found that we would be (put) into a deficit for calendar year 2015-16.”