The federal deficit is now slated to be significantly higher than initially projected
The 2020-2021 deficit is expected to come in at $28.1-billion, an $8.4-billion increase from budget projections this past March. And billions more will be added over the next four years as the Liberal government implements a new tax cut and adjusts federal pension obligations because of low interest rates.
Here’s Campbell Clark’s view: “The Liberals might be able to deliver on election promises, or leave a lot of room for spending ‘firepower,’ but they cannot do both – not unless they ditch the promise to keep the debt-to-GDP ratio from growing.”
The reason for the spike in federal deficit projections: A little-discussed accounting change related to public-sector pensions is a key factor behind the billions of dollars added to the Liberal government’s budget numbers, Parliament’s spending watchdog says.