Feds post $14B deficit

The Prince George Citizen - - Front Page - Andy BLATCH­FORD

OT­TAWA — The fed­eral gov­ern­ment ran a $14-bil­lion deficit in 2018-19, ac­cord­ing to its lat­est an­nual fi­nan­cial re­port, the third year in a row with a short­fall big­ger than $10 bil­lion.

The deficit for the fis­cal year that ended March 31 was $900 mil­lion smaller than the gov­ern­ment pro­jected in last spring’s fed­eral bud­get, how­ever.

Rev­enues in 2018-19 ex­panded by $21 bil­lion – or 6.7 per cent – com­pared to the pre­vi­ous year, said the re­port re­leased Tues­day.

The gov­ern­ment’s rev­enue ra­tio, which is to­tal rev­enues as a per­cent­age of the size of the econ­omy, in­creased last year by 15 per cent to reach its high­est level since be­fore the fi­nan­cial cri­sis in 2007-08. The growth in the ra­tio, which was 14.5 per cent in 201718, was mostly due to growth in per­sonal and cor­po­rate in­come tax rev­enues and other taxes, the re­port said.

The rev­enue gain was par­tially off­set by an in­crease of $14.6 bil­lion – or 4.7 per cent – in pro­gram ex­penses and an in­crease of $1.4 bil­lion – or 6.3 per cent – in pub­lic debt charges. The 2018-19 deficit fol­lows two straight $19-bil­lion short­falls, and the an­nual fi­nan­cial num­bers haven’t shown a sur­plus since 2006-07.

Over­all, the fed­eral debt in­creased to $685.5 bil­lion at the end of 2018-19. The debt-to-GDP ra­tio – a mea­sure of how bur­den­some the na­tional debt is – fell to 30.9 per cent from 31.3 per cent in 2017-18, the re­port shows.

The state of fed­eral fi­nances has al­ready been the sub­ject of po­lit­i­cal de­bate dur­ing the elec­tion cam­paign as par­ties ar­gue whether the gov­ern­ment should make an ef­fort to bal­ance the fed­eral books – and how quickly.

In the three full fis­cal years since the Lib­er­als came to power, the fed­eral gov­ern­ment has posted $52 bil­lion worth of short­falls even though the econ­omy has had a solid run of growth.

The Lib­er­als won the 2015 elec­tion on a plat­form that promised an­nual deficits of no more than $10 bil­lion and to re­turn to bal­ance by 2019.

Af­ter tak­ing of­fice, the Lib­er­als aban­doned the pledge and ar­gued even larger deficit-driven in­vest­ments were needed to im­prove Canada’s long-term eco­nomic growth. The gov­ern­ment shifted its fo­cus in­stead to re­duc­ing the net debt-to-GDP ra­tio each year.

The Con­ser­va­tives have long at­tacked the Lib­er­als for break­ing their 2015 deficit pledge and for not pro­vid­ing a time­line to re­turn to bal­anced bud­gets. They’ve ac­cused the Lib­er­als of bor­row­ing to­day on the backs of fu­ture gen­er­a­tions.

Ahead of next month’s elec­tion, the Lib­er­als have laid out pro­jec­tions call­ing for five more years of deficits of at least $10 bil­lion.

Con­ser­va­tive Leader An­drew Scheer is promis­ing to pull Canada out of the red in about five years.

Jag­meet Singh’s NDP, which promised bal­anced books in each of the last sev­eral elec­tion cam­paigns, no longer has a timetable to bal­ance the books. In­stead, it’s fo­cus­ing on low­er­ing the debt-toGDP each year.

Green Leader El­iz­a­beth May has com­mit­ted to re­turn­ing Canada to bud­getary bal­ance in five years.

Maxime Bernier’s new Peo­ple’s Party of Canada is the only po­lit­i­cal party that’s promised a quick path to bal­anced books – within two years.

CP PHOTO

Lib­eral Leader Justin Trudeau makes a cam­paign stop in St. John’s on Tues­day.

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