Midweek podcast: the politics of Bill Morneau's fall fiscal update
After spending the past week on the defensive, finance minister Bill Morneau got to deliver some good news on Monday.
Thanks to a roaring economy, the Liberals used the fall fiscal update to announce increases to the Canada Child Benefit and a more generous tax credit for low-income earners.
In his spring budget, Morneau expected to post a deficit of $28.5 billion for the current fiscal year. Thanks to rising revenues from an economy that leads the G7, that shortfall is now expected to be $19.9 billion.
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The finance minister's fall economic statement pegs GDP growth at 3.1 per cent this year and 2.1 per cent next, with unemployment at rates not seen in more than a decade.
Rather than earmark those newfound dollars to further reducing the deficit, the government is pressing ahead with nearly $8 billion in new spending over the next five years.
"With a little more wind in our sails, we're doubling down on a plan with proven results and reinvesting in the middle class," Morneau said Tuesday.
Highlights from the fall economic update include:
- Canada's economy (real GDP) is expected to grow by 3.1% in 2017 and by 2.1% next year.
- Projected deficit of $19.9B for 2017-18, down from previous estimate of $28.5B.
- Canada child benefit will see annual cost of living increases starting July 1, 2018, 2 years early.
- Benefit for a middle-class family with 2 kids will go up by about $200 next year, by $500 in 2019.
- $500M more a year to enhance Working Income Tax Benefit for 1.5 million low-income workers, starting in 2019.
- Small business tax rate falls to 10 per cent Jan. 1, and to 9 per cent in 2019.
- Federal debt projected to grow by $100B over next 7 years.
- Debt-to-GDP ratio still projected to fall faster than predicted in the spring budget, to about 30% by the next election.
The CBC's Rob Russo, David Cochrane and Karina Roman join Chris Hall to put Bill Morneau's update under the microscope.