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

New Sonic the Hedgehog trailer shows off Ladysmith and new character animation

At long last, Sonic the Hedgehog will hit theatres on February 14

Diamond District woman warns against the use of rat poison

At some point between breakfast and lunch Martin had suddenly collapsed and died

Calling all believers: Chemainus Theatre Festival runs Miracle on 34th Street

Opening night is Friday, November 15, and closing is December 29

Remembering Jack Neil, ace fighter pilot and father

Remembrance Day is an opportunity for John Neil to remember his father, Jack

Ladysmith Arts Council creates Remembrance Day poppies for display

The poppies were prepared by both established artists, and student artists

VIDEO: Disney Plus gives Canadians a streaming platform that nearly matches U.S. version

The Walt Disney Company’s new subscription platform unveiled a comprehensive offering of nearly 500 films

Sex assault charge stayed against Port Moody mayor

Rob Vagramov appeared in provincial court in Port Coquitlam

73% of B.C. residents agree with a temporary ban on vaping products: poll

54% say they would not date someone who vapes, Research Co. poll suggests

B.C.’s 13-cent gasoline gap still a mystery, Premier John Horgan says

NDP plans legislation this month, seeks action from Justin Trudeau

Former Vancouver Canucks player suing financial advisors for negligence

Jason Garrison claimed his advisors failed to take his circumstances into account

Group walking on thin ice at B.C. lake sparks warning from RCMP

At least seven people were spotted on Joffre Lakes, although the ice is not thick enough to be walked on

B.C. teacher said he would use student to ‘whack’ two others on Grade 8 field trip

Campbell River teacher-on-call suspended three weeks after November 2018 incident

Petition to ‘bring back Don Cherry’ goes viral after immigrant poppy rant

Cherry was fired from his co-hosting role for the Coach’s Corner segment on Nov. 11.

Bill Murray dons iconic Hudson’s Bay scarf to watch Canucks game in Vancouver

Murray is in Vancouver to film The Now, a mini-series directed by Peter Farrelly

Most Read