Erasing the federal deficit

An editorial from the Halifax Chronicle Herald:

Canada will run a budget surplus by 2045, the federal finance department projected on the Friday before Christmas. Finance says this is better than last year’s long-term forecast, when the deficit was to be eliminated in 2055.

Was this some kind of bad joke? No balanced budget for 28 years — or seven government four-year lifespans? That’s the low bar of budget management the current government is setting for itself and its successors? We certainly hope not. For what this forecast represents is a long-term, do-nothing scenario.

For good reason, the department calls these long-term budget numbers “scenarios” rather than forecasts because they “are subject to a fair degree of uncertainty.” In particular, differences of opinion on future economic growth can change them dramatically.

In his fall update, Finance Minister Bill Morneau forecast a deficit of $19.9 billion this year, falling to $12.5 billion in 202223. Keeping to this scenario would break the government’s election promise to balance the budget by 2019-20.

Given the current robust economy, Morneau should keep that promise and not use the long-term scenario as an excuse to coast on fiscal management.

The best way for the Trudeau government to use the longterm data is to show it can do better. For the long scenario is a best guess of what to expect if government isn’t really trying. Morneau owes us more than that.