Liberals under pressure to balance budget and policy asks in fiscal update
Global News
Inflation rates that have hit 18-year highs, along with strong growth in employment and the domestic economy, could cause the government to ease up on its platform spending plans.
The Trudeau Liberals are set to unveil an update on the health of federal finances and its outlook for the economy while facing competing demands on benefits, taxes and economic growth.
It’s a tall order for a document that the Finance Department has signalled won’t include a bevvy of new spending items.
The government outlined its major priorities in the spring budget, such as a national child-care system, said David Macdonald, senior economist with the Canadian Centre for Policy Alternatives.
From a political standpoint, the government doesn’t have a lot of time before the holiday season to promote any new, major measures, Macdonald said. The government will likely wait for next year’s budget for any big spending proposals, he said.
“I don’t think that there’s going to be a lot of actual new policy despite the fact we just had an election,” Macdonald said.
“There’s likely to be very little in there except the deficit figures are smaller, probably.”
The government predicted the deficit for last fiscal year would be $354.2 billion, and nearly $155 billion this year. But federal books could have as much as $10 billion in extra fiscal space helped by higher oil prices, which have also helped push up inflation rates.
Inflation rates that have hit 18-year highs, along with strong growth in employment and the domestic economy, could cause the government to ease up on its platform spending plans, said Stephen Brown, senior Canada economist with Capital Economics.