Long-term deficit projections trimmed

Canada in better shape after 2017 growth

OTTAWA — The federal Finance Department has shaved several years of projected deficits from Canada’s long-term financial future following better-thanexpected economic growth in 2017 — though many more years of deficits remain.

Finance officials predicted in a report released Friday that barring any policy changes, the federal government could be on track to run annual shortfalls until 2045-46, compared with projections last year that deficits would run to 2050-51.

If such a scenario played out, the deficit would reach an annual high of $24.8 billion about 2030-31 before beginning to fall.

By 2040-41, federal debt would top out at about $1.08 trillion before starting to fall, as compared with last year’s prediction that it would reach $1.55 trillion by 2050-51.

The improvement is attributed to an overall boost in the fiscal outlook, particularly in the medium term, which comes after the Canadian economy mounted a resurgence over the last year.

While long-term predictions contain considerable uncertainty, Finance Minister Bill Morneau said the projections prove the Liberal government’s plan is bearing fruit.

“We have an ambitious plan to grow Canada’s economy by investing in people, growing the middle class and helping those working hard to join it,” Morneau said in a statement Friday. “Our plan is working.”

The Liberals won the 2015 election partly on a plan to spur economic growth by running annual deficits of no more than $10 billion over the first couple of years to pay for infrastructure investments before balancing the books in 2019-20.

They abandoned those “fiscal anchors” as the economy took a beating from collapsing oil prices in 2016, and have instead focused on lowering the debt-to-GDP ratio, which is a measure of Ottawa’s debt burden.

The Opposition Conservatives wasted no time latching onto Friday’s report to further their argument that the Liberals are leaving a legacy of debt.

“Justin Trudeau will be a 74-year-old man relaxing on a private island before the budget is balanced,” Conservative finance critic Pierre Poilievre said in a statement.