Finance Department predicts federal budget will be balanced by 2040

Finance Department predicts federal budget will be balanced by 2040

The annual update on the long-term outlook for federal finances says that if things go better than expected, the budget will be balanced or almost so by 2024.

A balanced federal budget won’t land until at least 2040 — five years earlier than the government predicted last year — if there aren’t any major economic shocks or new government spending the federal Finance Department says in a new report.

Long-term budgetary projections released Friday morning estimate that by the end of fiscal year 2040-2041, federal books will be in surplus by $1.7 billion, based on current assumptions for how the economy will grow, and expectations that promised Liberal programs to help boost business investment will yield a financial windfall for the country — and then for federal coffers.

The annual update on the long-term outlook for federal finances says that if things go better than expected, the budget will be balanced or almost so by 2024.

But if things go poorly, and the economy doesn’t grow as fast as federal officials predict, then the deficit could get worse until 2034.

The Trudeau Liberals promised during the 2015 election to balance the books by the end of their mandate — 2019 — after running small deficits.

The government’s February budget predicted a deficit of $18.1 billion for the current 2018-19 fiscal year, which ends in March.

The report says federal finances appear sustainable over the long term, with the Liberals’ favoured fiscal number, the federal debt as a percentage of gross domestic product, expected to decline over time. That’s a way of measuring how heavy the debt burden is compared with the size of the national economy rather than just tallying the total the federal government owes.

The government’s debt, which as of October stood at $669.5 billion, is expected to peak at almost $960 billion in the same year the budget reaches balance, the report says.

Read more: Federal budget bill quietly proposes tool to ease penalties for corporate crime

Read more: Airbnb’s federal budget proposal tells Liberals, ‘we want to be regulated’

The Finance Department warns the projections are based on a number of assumptions about population and economic growth, making the projects “subject to a fair degree of uncertainty.” Nor do they take into account any new government spending or taxes over the coming years.

Ottawa ran a small surplus of $92 million through the first seven months of its fiscal year, compared with a deficit of nearly $6.6 billion in the same period last year, as revenue has increased faster than spending.

According to the monthly fiscal monitor report from the Department of Finance, revenue totalled nearly $186.1 billion between April and October, up about 8.3 per cent from $171.8 billion in the same period last year.

The increase came due to rises in tax revenue, employment-insurance premiums and other revenues.

Program spending has topped $171.8 billion, up about 3.7 per cent from $165.8 billion over the same stretch last year, while public debt charges so far this fiscal year totalled more than $14.1 billion, up 12.1 per cent from almost $12.6 billion.

For the month of October, which is as far as the latest report goes, the federal government posted a deficit of $1.1 billion, compared with a deficit of about $400 million in the same month last year.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Prince Rupert Regional Airport is on track for flights to resume to the local airport on June 23. New airport federal funding was announced on May 11 to assist with COVID-19 recovery.  (Northern View file photo)
New federal airport funding takes off

Flights on track to resume June 23 at Prince Rupert Regional Airport

School District 52 Board of Trustees amended the 2021-2022 budget on May 11, eliminating 13 itinerant teaching positions as well as making other line item cuts and increases. (File photo)
SD 52 amends 2021-2022 proposed budget to eliminate 13 itinerant teaching positions

It has everything to do with the fact they were hired without the approval of the board - Tina Last

Seafest 2021 will see different types of bubbles, especially social bubbles for the June 11 to 13th weekend festivities planned in a COVID-19 safe format with activities for families bubbles able to social distance safely. (Photo: Nothern View file photo.)
Seafest is launching in June

New ideas, new format to keep Prince Rupertcommunity festival afloat

Mayor Lee Brain said at the May 10th council meeting that city has 'zero jurisdiction' over the federal CN Rail. Rail lines and trains in Prince Rupert on May 11. (Photo: K-J Millar)
Prince Rupert Council all aboard for rail safety

City councillors want to ensure local voices are heard at federal rail safety hearings

Skeena Bulkley-Valley MP Taylor Bachrach has been working across party lines to have rail safety issues addressed. An April 27, 2020 train derailment blocked five intersecting tracks on the CN rail line in Prince Rupert close to the waterfront on Bill Murray Drive. (Photo: K-J Millar/The Northern View)
Bachrach pushes for rail safety and wants NW voices to be heard

Residents and community leaders are concerned about safety and preparedness in the NW

B.C. Labour Minister Harry Bains in the B.C. legislature, May 13, 2019. (Hansard TV)
VIDEO: B.C. to provide 3 days of sick pay for COVID-19 absences

Province will support employers on cost, labour minister says

BC Housing minister David Eby. (THE CANADIAN PRESS/Chad Hipolito)
Eby jabs back against Penticton mayor’s ad urging BC Premier to intervene in shelter dispute

Eby writes that Penticton’s ‘serious’ social issues won’t improve under leadership of the mayor

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature, April 29, 2021. (B.C. government)
B.C.’s COVID-19 rate creeps up again, 600 new cases Wednesday

One more death, 423 people in hospital with virus

B.C. Agriculture Minister Lana Popham takes questions in the B.C. legislature in 2017. (Hansard TV)
UPDATE: B.C. will fund another year of fresh fruit, vegetables, milk in schools

John Horgan government working on school meal program

Surrey RCMP is releasing sketches of a suspect in an “indecent act” at the Coyote Creek Elementary playground on April 30, 2021. Police said the suspect was clean-shaven “during some interactions” and on “other occasions had stubble outlining a goatee and mustache.” (Images: Surrey RCMP handout)
Vancouver mayor-elect Kennedy Stewart addresses supporters in Vancouver on Sunday, Oct. 21, 2018. THE CANADIAN PRESS/Darryl Dyck
Vancouver mayor says there’s no time to redo details of drug decriminalization plan

Kennedy Stewart says a federal election could see the small window of opportunity close on the city’s bid for an exemption from criminal provisions on simple possession of small amounts of drugs

Premier Mike Horgan received his first dose of a COVID-19 vaccine. (Facebook/John Horgan)
More than 50% of people eligible in B.C. have received 1st vaccine dose

‘We’ve made extraordinary progress together over the past few weeks,’ says Premier Horgan

Brad MacKenzie, advocacy chair for the ALS Society of B.C., says having research projects in the province allows people here to have access to cutting-edge treatments now being developed. (B.C. government video)
B.C. funds research chair for Lou Gehrig’s disease at UBC

Pandemic has cut off patient access to international projects

Most Read