On December 21, the federal government released their annual set of long-term projections for the Canadian economy. While it shows continued growth, even in the face of an ageing labour population, the document predicts that the federal budget will not be balanced until 2040.
In the report, Update of Long-Term Economic and Fiscal Projections 2018, prepared by the Ministry of Finance, the feds layout what they see as the future of the Canadian economy, both the predicted growth and challenges faced in coming generations.
“After having posted the strongest economic growth of all the Group of Seven
(G7) countries in 2017,” the document reads, “Canada is still expected to remain among the fastest-growing economies this year and next.”
Most notably is the predictions of challenges the economy will face that will hamper growth—in particular, the country’s ageing labour force.
“Economic growth stems from growth in either labour supply or labour productivity (real output per hour worked). Reduced labour force participation due to population ageing has already started and is expected to continue to reduce growth in labour supply.”
The biggest point of contention for the opposition, however, has been the revelation of when the government has estimated the country’s budget will stop running a deficit.
There will be a “gradual reduction in the budgetary deficit starting in 2020–21 as well as a continuously declining federal debt-to-GDP ratio,” says the report. It does not, however, indicate a surplus until between the years 2040-2041.
This 22-year wait is actually five years less than was predicted in the same document last year.
In 2014, then merely Liberal Party Leader, Justin Trudeau promised a balanced budget by the end his first mandate as Prime Minister — 2019. This time period also included the famous quote, often pointed to by his opponents, where Trudeau said “the budget will balance itself,” during a television interview.
The Tories haven’t been impressed with the results since his election. On November 19, Conservative Shadow Finance Minister Pierre Poilievre filled a motion asking that the government to reveal when they would provide a balanced budget.
It was not carried and Poilievre has continued his criticism of Liberal spending. Following yesterdays announcement, he released a tongue in cheek response video to his Twitter account
BREAKING: Budget will not be balanced in 2019 as Trudeau promised–deficits to continue until 2040. Merry Christmas, everyone! pic.twitter.com/PaU7qfay6x
— Pierre Poilievre (@PierrePoilievre) December 21, 2018
Trudeau, during an end of year press conference, did not address the deficit spending directly but defended his economic record.
“As you know the latest job numbers are excellent,” he said. “In November more than 94,000 jobs were created in this country and unemployment is at its lowest in 40 years.
“Over the past three years, we have made investments to help the middle class grow, innovate and prosper.”
It’s been a busy year – our economy is strong and growing, and we’ve accomplished a lot together in 2018. But we know there’s even more work to do for Canadians, and we’ll be there for you: pic.twitter.com/vQ39Seqh07
— Justin Trudeau (@JustinTrudeau) December 20, 2018
The new year will bring the first election where Trudeau has to defend his position as Prime Minister. He’ll be facing off against a Conservative opposition that is already gearing up to tear apart his platform on finance, immigration and, as always, haircut.