At a cabinet retreat this week, federal Finance Minister Bill Morneau said his Liberal government plans to keep spending and investing in multi-billion dollar infrastructure projects rather than reduce the federal deficit.
Minister Morneau made the comments outside a cabinet retreat in St. John’s, Newfoundland, where the federal Liberals are preparing their strategy for the fall session of Parliament. Reporters in attendance had asked the Finance Minister if reducing the federal deficit, which now stands at nearly $30 billion, was a priority now that the Canadian economy is gaining steam.
"We find ourselves in this positive position because of the economic approach we’ve taken,” said Morneau, referring to his government’s spending over the past two years on lower income-tax rates and enhanced child care benefits. “We’re going to continue down that path and we’re going to do it in a fiscally responsible way."
Morneau added that Ottawa intends to pursue its plan to invest more than $180 billion in infrastructure over the coming 11 years. That spending is projected to contribute to annual, multi-billion-dollar shortfalls across Ottawa’s five-year budgetary outlook. The finance minister`s remarks come after several months of impressive economic indicators, including a recent report that showed economic growth expanded at an annualized rate of 4.5% in the second quarter of this year.
Opposition parliamentarians, and some economists, have criticized the Liberals penchant for spending, and their willingness to run deficits in good or bad economic times. An analysis released earlier this week by the University of Ottawa forecasts that the stronger-than-expected economy should give the federal government an additional $6.5 billion in revenues this year that it could put towards deficit reduction – if it so chooses.
Morneau said late Tuesday that Ottawa plans to stick with its spending strategy – especially on infrastructure – because it’s designed to lift the economy over the long-term. The Liberals won the 2015 election on a promise to invest billions of dollars into infrastructure and child benefits as a way to bolster the economy. During the federal election, the Liberals pledged that annual deficits would not surpass $10 billion and that they would return to balanced budgets by the 2019-2020 fiscal year. However, a few months after taking office, the government abandoned those promises, citing a weaker-than-expected economy.
