(Ottawa) Red ink is flowing abundantly in Ottawa. The federal government recorded a deficit of $61.9 billion in the last fiscal year that ended March 31, nearly $22 billion more than former Finance Minister Chrystia Freeland promised. in its last budget tabled in April.
Published yesterday at 4:00 p.m.
The deficit is expected to amount to $48.3 billion for the 2024-2025 financial year – once again higher than the $39 billion announced in the last budget, the Ministry of Finance said in the economic statement unveiled Monday.
This statement, which proposes investments of $1.3 billion over the next five years to secure the Canadian border, was to be tabled by Chrystia Freeland in the House of Commons. But Mme Freeland resigned as Finance Minister Monday morning, causing an unprecedented crisis within the Trudeau government, already tested by nine years in power.
PHOTO BLAIR GABLE, ARCHIVES REUTERS
Chrystia Freeland
Mme Freeland submitted her resignation in a blistering letter after being informed Friday by Prime Minister Justin Trudeau that she would be moved to another position shortly as part of the upcoming cabinet shuffle. Mr. Trudeau would have offered him the position of minister responsible for Canadian-American relations, without a real ministry, according to information obtained by The Press.
Late in the afternoon, Justin Trudeau turned to a long-time ally, the Minister of Public Safety, Dominic LeBlanc, to lead the Ministry of Finance.
The deficit for the last fiscal year far exceeded projections made in April due to unexpected expenses related to the liability for indigenous peoples’ claims and provisions related to support allocations paid during the COVID-19 pandemic, a senior official said of the Ministry of Finance.
Before her shock resignation on Monday, Chrystia Freeland had suggested that she would be unable to keep the deficit below $40 billion. However, she affirmed that the federal government would be able to respect another financial anchor announced in the last budget, namely to maintain the debt ratio as a proportion of gross domestic product (GDP) at 42.1%.
According to the Ministry of Finance, deficits will still be there over the next five years. The deficit is expected to reach $42.2 billion in 2025-2026, around $31 billion in 2026-2027, another $30.4 billion in 2027-2028 and almost $27.8 billion in 2028-2029. Since coming to power in 2015, Justin Trudeau’s Liberals have never presented a balanced budget.
“The government is determined to respect its fiscal anchor: reducing the federal debt-to-GDP ratio over the medium term. This measure is essential not only to ensure the sustainability of public finances, but also to preserve Canada’s AAA credit rating, which helps maintain investor confidence and keeps Canada’s borrowing costs as low as possible. can we read in the document from the Ministry of Finance.
“Black Clouds”
But according to Robert Asselin, first vice-president of the Business Council of Canada and a former close collaborator of former Finance Minister Bill Morneau, the Trudeau government has lost control of public finances.
“The problem is that they are already at a $60 billion deficit when the dark clouds appear: threat of American tariffs, the need to invest in defense and Canada flirting with a recession,” said said Mr. Asselin.
For all intents and purposes, this government has lost control of public spending.
Robert Asselin, first vice-president at the Business Council of Canada
The economic statement from the Ministry of Finance confirms numerous measures from the Trudeau government that have already been announced in recent weeks and which aim to accelerate the construction of new housing, reduce the cost of living and increase productivity as well as stimulate innovation.
The document also highlights the GST holiday on certain products which is in effect between December 14 and February 15 and which will cost the Canadian tax authorities $1.6 billion. But we are ignoring another measure that was announced by Prime Minister Justin Trudeau and his former Finance Minister Chrystia Freeland last month, namely the sending of a check for $250 to all workers who pocketed a salary net of $150,000 or less in 2023.
This measure sparked an outcry in the Commons, with the Conservative Party and the Bloc Québécois denouncing a costly electoral measure while the New Democratic Party demanded its extension to the elderly and people with disabilities.
These two measures caused tensions between the office of Mme Freeland and that of the Prime Minister. In his resignation letter, Mr.me Freeland called the measures “costly political gimmicks” that should not have been proposed while Canada must prepare for a tariff war with the United States.
A senior finance ministry official said the measure was not included because it did not have the necessary support in the Commons.
Border Security
Regarding investments of $1.3 billion to secure the border, this amount will allow the Royal Canadian Mounted Police to purchase drones and helicopters and hire new personnel to ensure increased surveillance at the border .
The Border Services Agency will also get additional money to recruit agents and will also be given new powers allowing it to inspect packages before they leave the country.
In the economic statement, the Trudeau government announces that it plans to attach conditions to the payment of major transfers to the provinces and territories regarding the elimination of obstacles to internal trade and labor mobility.
We also confirm that the federal government has divested itself of Air Canada shares it had held since the pandemic. The investment of 500 million dollars brought a net profit of 43 million to the Canadian tax authorities.
