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

RDN grants $1.1 million for replacement of leaky pipes in Cedar

Tender for installation of PVC pipe on Cedar Road area closes Oct. 9

Fire official deems morning fire at Nanaimo school suspicious

Nanaimo Fire Rescue extinguishes fire at portable at École Océane

Nanaimo hotel tax set to go up

Hospitality association lays out five-year plan for tourism in Nanaimo

Tour de Rock ready to start making its way down Vancouver Island

Tour de Rock takes place Sept. 21 to Oct. 4

Public meeting will explore ideas to battle addiction and crime in Nanaimo

Organizers call for treatment centres, accountability for crimes, citizens’ task force

Kids meet machines at diabetes research fundraiser at Nanaimo’s port

Meet a Machine was held Saturday at the Port of Nanaimo

Festival parade ‘jazzes’ up downtown Nanaimo

Nanaimo International Jazz Festival closes with Laila Biali Trio Sunday

Opposition to 388 Machleary proposal over-extends public hearing

Nanaimo residents 10-1 against development plan in Old City Quarter, public hearing to be continued

Nanaimo Astronomy Society guest will talk about array of antennas

Guest speaker tells about working with 16-kilometre radio observatory in Chile

Nanaimo high school students cut class to attend climate action rally

Extinction Rebellion Nanaimo rally raises awareness, demands action against climate change

PHOTOS: Steller sea lion with plastic around neck rescued on Vancouver Island

Rescue staff determined the plastic band cut the protected animal’s neck approximately two inches

Nanaimo beekeepers take down nest of giant hornets

One nest eradicated at Robins Park, but there are still Asian giant hornets around

Beefs & Bouquets, Sept. 19

To submit a beef or a bouquet to the Nanaimo News Bulletin, e-mail bulletinboard@nanaimobulletin.com

Nanaimo athletes earn gold, silver, bronze at 55-Plus B.C. Games

Huge contingent of local participants competed in largest-ever 55-Plus B.C. Games in Kelowna

Most Read