Feds start fiscal year with surplus
OTTAWA — The federal government started the fiscal year with the tiniest of budgetary surpluses, though the black ink is expected to turn very red in the coming months.
The Finance Department’s monthly fiscal monitor released Friday reports that the government posted a $68-million surplus for April and May, just less than last year’s total over the same period.
The federal government’s fiscal year runs from April 1 to March 31.
The surplus is not expected to last, however, as the Liberals have promised to run deep deficits over the coming years to finance major infrastructure work and more lucrative child benefits.
The feds ended up running a $21.85-billion deficit last year, and have projected a $28.5-billion deficit this year.
The Finance report shows that program expenses increased by six per cent, or more than $2.6 billion, in April and May compared to the same period last year.
About half of the increase was due to more money being spent on benefits for the country’s growing number of seniors as well as the new Canada Child Benefit. Much of the rest was in the form of additional spending on federal departments and agencies.
The growth in expenses outstripped the nearly $2.3-billion, or 4.7 per cent, increase in revenues, which included a major boost in money raised by the GST but only moderate gains in income tax.
However, public debt charges were down by 7.1 per cent, or $312 million, which helped push the final total from red to black.
The Liberals won the 2015 election on a platform that promised annual deficits of no more than $10 billion over the next couple of years, and to eliminate the deficit by 2019-20.
They are now projecting doubledigit deficits until at least 202122, and have not provided a timeline for when the budget will be balanced.
The Liberals and opposition Conservatives have been locked in a long-running and bitter battle over the state of the country’s finances.
Prime Minister Justin Trudeau has blamed the Tories for leaving his incoming Liberal government with an $18-billion hole to fill after the 2015 election.
The Conservatives counter that their budget had a small surplus, and that the Liberals have been recklessly spending since coming to power.
The Finance Department report was released the same day that Statistics Canada said the country’s economy grew by a surprisingly strong 0.6 per cent in May, thanks to the energy sector.
That has raised expectations the Bank of Canada could raise its key interest rate again this year.