Inflation isn't a major political problem for the Liberals — not yet, at any rate

Finance Minister Chrystia Freeland softly touted Tuesday's economic and fiscal update as a document that does what it says on the tin.

"Look, this fiscal update is what the title says. It's a fiscal update of where we are in the economy today and it includes the measures that we believe are urgent and necessary right now," she told reporters shortly before appearing before the House of Commons.

This was "not the master plan for the Canadian economy going forward," she said. That plan, she added, "will be in the budget."

Tuesday's update is a bridge between the 2021 and 2022 budgets and represents a brief chapter in a longer story about the role of government in the post-pandemic world.

Pierre Poilievre, the Conservative finance critic, called Freeland the "minister for inflation" yesterday and repeated his claim that "half a trillion dollars of inflationary deficits means more dollars chasing fewer goods and higher prices." 

WATCH: Opposition MPs respond to the fiscal update

Conservative Leader Erin O'Toole called the fiscal update "another hollow economic statement" of "empty promises, massive debt, higher taxes and no real economic plan."

There was new spending in Tuesday's update — the kind Freeland's opponents might find hard to attack.

As promised on Monday, the fiscal update earmarks $40 billion to address Canada's failure to provide for Indigenous children and to reform the child welfare system. It sets aside $5 billion to respond to flooding in British Columbia and another $4.5 billion to deal with whatever the omicron variant brings. There's also $7.4 billion for vaccine procurement, $1.7 billion for rapid tests and $2 billion for therapeutics.

"I don't think any Canadian will regret our spending on things like rapid tests, on things like therapeutics," Freeland told reporters.

WATCH: Freeland presents fiscal update

Higher-than-expected revenues more than offset the new spending, resulting in deficit projections smaller than the ones Freeland tabled in the spring. The Liberal government now projects a deficit of $144.5 billion for the current fiscal year and $58.4 billion for next year. By 2025-2026, the shortfall could be down to $22.7 billion — just slightly more than it was in 2018.

Deficits in that range would also be smaller than those the Conservatives said they would run if they formed a government after the last election.

But those deficit projections are also provisional — the government's accounting does not yet include any of the new tax or spending commitments the Liberals presented in their own election platform. Sooner or later, the federal government might also be compelled to deal with the perennial plea from the provinces for a new long-term agreement on health care funding.