Feds still need a deficit plan

From the basket of budgetary goodies Finance Minister Bill Morneau happily doled out to Canadians on Tuesday, there was one important item missing.

To be sure his fall fiscal update was brimming with more, mouth-watering money for families and low-income workers as well as a tax cut for small business people who just days ago were incensed by the minister’s fumbling attempt to close tax loopholes.

But as welcome as this new spending will be for many Canadians, and as much as it will burnish Morneau’s tarnished image, he was silent on one of the Liberals’ main election promises and an issue of national importance.

There was no mention of when — or even if — this government will balance the books and stop spending billions more each year than it takes in.

This oversight could cause heartache down the road. But the Liberals would rather you think about today.

Blessed with surprisingly robust economic growth, the feds are flush with $8.9 billion in unexpected revenue.

Morneau will use some of this to start indexing the cost of living for the Canada Child Benefit next July and to enhance the Working Income Tax Benefit starting in 2019.

The two measures deserve applause especially for the help they’ll deliver to poor children and working families.

The new tax break for low-income workers will encourage people to stay employed which, in time, can only benefit those individuals and our overall economy.

In contrast, the tax cut for small businesses is both suspicious and questionable.

It may have been driven by the nationwide backlash against Morneau’s earlier plan to stop individuals from avoiding taxes by incorporating as a small business.

Ironically, this tax cut may entice more people to do what Morneau was so recently trying to stop.

Despite this and other new spending, the Liberals can be credited for using most of their revenue windfall to lower this year’s deficit from the one of $28.5 billion originally forecast to $19.9 billion, a figure that includes an adjustment for forecasting risks.

It’s good to see the Liberals on track to continue reducing that deficit. And it’s reassuring that the ratio of federal debt to Canada’s gross domestic product will continue to fall.

The fly in the ointment is Canada’s clouded economic future. Everyone agrees our economic growth is slowing. Everyone agrees our economy will suffer if efforts to negotiate a new North American Free Trade Agreement fail.

And with the last recession nearly a decade in the past, it’s none too soon to begin planning for another one.

Yet the Liberals continue to ignore their promise to limit annual deficits to no more than $10 billion and eventually eliminate those deficits.

Broken promises feed public cynicism. In this case they might also erode our economic well-being.

The Liberals could go a long way to assuage reasonable concerns about the future by offering some kind of commitment to balance the budget by a specified date.

Today, their deficit isn’t overly worrisome. Next year, it might be.