Surprise! New government finds bigger hole than expected in the budget
A gloomier than anticipated fiscal outlook won't deter the new federal government from delivering on its infrastructure spending promises, but it may also provide an incentive cut back on other spending.
"My mandate letter as Treasury Board president is to conduct an expenditure review process," Scott Brison told Terry Milewski on CBC Radio's The House. "We will insure that programs delivered to Canadians and services provided to Canadians are done so in a way that respects taxpayers' interests."
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On Friday, the Finance Minister Bill Morneau revealed that while the last Conservative budget forecasted a $2.3-billion surplus for this year, Finance Canada now says it's more likely the year will end with a $3-billion deficit — and that's before Liberal campaign promises are costed in.
Scott Brison argued the reasons that happened are that the previous government put together its budget based on "quite rosy growth projections, and of course, on one time asset sales, GM shares, that kind of thing, to eke out a small surplus. But the reality is that since then we have seen a significant shift in terms of the growth projections for the Canadian economy."
Lisa Raitt, the Conservative Party's newly-appointed finance critic, conceded that some of her government's projections were off — but said they were based on the best data available at the time.
"Private sector economists are the ones that gave us the [GDP growth projection] range back in March," Raitt said.
"We had a forecast. The situation has deteriorated over the summer. We see what's happen globally and we see what's happening in the oil sector — where the price isn't rebounding."
But Raitt said now is not the time to look in the rearview mirror. With such gloomy numbers, the focus should be squarely on how much further the Liberals will dip into the red.
"Obviously, we want to see growth in Canada. We don't want to be in a deficit situation," Raitt said. But Tory finance critic cautioned against the deficit spirialing out of control.
"This Liberal government wants to have bigger deficits and what I'd like to know is how big is big enough and how big is too big."
Raitt said that the numbers will be much worse when the Liberal campaign promises are factored into the budget equation.
She pointed to the party's pledge to restore Canada Post's door-to-door mail service, among other commitments, as a costly promise that will come with a yet-unknown price tag.