1st Liberal Budget Gives Canada a $29 Billion Deficit this Year and $118.6 Billion Over 5 Years

[DonLever]

from National Post:

 

Federal budget 2016 consigns Canada to $118.6 billion deficits into next decade

The Liberals call it “important investments in the future of Canada.” Their opponents claim it is reckless social spending the country can ill-afford. What is beyond dispute is that the election promise of modest deficits is in tatters, as the government revealed it will spend, spend, spend well into the next decade.

Finance Minister Bill Morneau revealed Tuesday the red ink in the coming year will run to $29.4 billion, part of a cumulative $118.6 billion that will be added to the national debt over the next six fiscal years (including $5.4 billion in 2015-16, even though the country had a year-to-date surplus of $4.3 billion as of the end of January).

[elvis15]

I think you mistook CDC for Twitter. There is no 140 character limit.

[thejazz97]

Watch it be a surplus in three/four years

[Warhippy]

http://www.cbc.ca/news/politics/budget-day-coverage-liveblog-livestream-1.3501470

 

Lots of spending, new numbers dictate the current budget and cap.  Libs carrying through with majority mandate of ensuring some things get repealed, new funding in areas that were cut and the re-opening and reintroduction of offices/services/programs shuttered and closed by the prior government.

 

The most amazing and refreshing thing thus far is that this is a budget delivered in the house to the house and not via omnibus legislation, and not done in front of a room full of business elite.

 

As well, while I am not happy about the size of the potential deficit, it is predicated on a .04% growth rate which should it climb higher will bring that deficit number down.  Any upturn in the economy will change those numbers for the better.  

 

But the best thing is that, even though we will be running a deficit, they are being open, honest and transparent about it.  So while this sucks, while the numbers are huge.  At least they're not lying about it and are being upfront instead of hiding and lying about it

[peaches5]

That's what happens when you build infrastructures instead of just selling all our $&!# for pennies on the dollar.

[DonLever]

 

Quote

At least they're not lying about it and are being upfront instead of hiding and lying about it

They did lie about it because during the election they said they will only run a deficit of $10 Billion.

[Tre Mac]

Legalize it, problem solved....... for me atleast.

[Warhippy]

1 minute ago, DonLever said:

 

They did lie about it because during the election they said they will only run a deficit of $10 Billion.

No...they said that their deficits would be $10 billion depending on the actual numbers.  they were ALWAYS clear about that being predicated on what the factual numbers said.

 

And the numbers, I might add were far and way worse than what the Conservatives told the nation they were

[Warhippy]

The first budget from Justin Trudeau's government finds the Liberals compromising some of their election promises to keep others, laying out a longer and larger string of deficits to begin the kind of long-term investments they say Canada needs.

While the big ticket items match the platform that helped the Liberals win a majority last October, other commitments aren't ready to roll out.

Finance Minister Bill Morneau called the plan "reasonable and affordable," despite the red ink washing across the otherwise sunny tone of his rookie budget.

"Canadians told us two things: they said 'help me and my family' and 'make investments for the future'," he told reporters before delivering his budget speech. 

"What we're also going to do is be prudent along the way."

The budget centres on a suite of moves to help the middle-class Canadians: a focus of Liberal attention for months. A tax cut passed in December lowered the middle-income tax rate by one and a half points and brought in a new top tax bracket for high earners.

New family benefit starts in July

A new tax-free Canada Child Benefit starting July 1 will increase payments for most Canadians with children, simplify the tax codeand offer greater assistance to lower-income families.

It replaces both the income-tested tax-free Canada Child Tax Benefit and the Universal Child Care Benefit, which was taxable.

Families with incomes under $30,000 will receive the maximum benefit of $6,400 per child under six and $5,400 per child between six and 17, a gain of about $2,500 a year per child.

As incomes rise, the benefit will be progressively clawed back, and eliminated entirely for households earning more than $190,000.

The $4.5-billion net cost of the program for the coming year is partially offset by the elimination of the Conservatives' income splitting for families, a measure that would have cost the treasury $1.9 billion.

Tax credits for children's fitness and arts expenses also are being phased out over two years, with maximum eligible expenses cut in half for 2016 and eliminated entirely in 2017.

Billions for infrastructure, Indigenous peoples

The 2016 budget begins fulfilling the Liberal pledge to spend $120 billion on new and existing infrastructure over 10 years.

Phase one will focus immediately on public transit, water and wastewater systems, and affordable housing, something Trudeau himself admitted last week was "unsexy."

Later investments will be "broader and more ambitious," the budget promises, focusing on the government's goal of shifting to a low-carbon economy and positioning Canadian cities to be more competitive internationally.

The budget allocates $8.4 billion over five years to help bring about "transformational change" in the socio-economic conditions of Canada's Indigenous peoples and their communities.

That includes $2.6 billion to improve primary and secondary eduction on reserves. 

A further $635 million over that span will go to improve family and child services, a figure welfare advocate Cindy Blackstock said falls short of the spending necessary to bring services for First Nations children in line with non-Indigenous services.

In the next two years, $500 million has been allocated to improve First Nations housing and another $225 million for on-reserve infrastructure. 

Other funding targets improvements in drinking water and waste management.

EI overhaul, but no corporate tax cut

The budget also takes significant steps to overhaul the employment insurance system, something forecast to cost over $2.4 billion over the next two years.

But it does not change the corporate tax rate for small businesses, a move much-discussed during the fall election campaign. Morneau told reporters Tuesday that what businesses really need is an economy that works, while the middle-class consumers businesses rely on will see their circumstances improve with the budget's measures.

Budget promises big changes for federal bureaucracy

The 2016 budget also:

Increases programs to assist injured veterans, and restores 9 previously closed veterans affairs offices.
Provides new investments to promote scientific research, including a $2 billion fund for post-secondary institutions to modernize their facilities.
Increases Canada Student Grant amounts by 50 per cent for students from low and middle-income families and part-time students.
Rolls out a $2 billion low carbon economy fund, announced earlier this month with Canada's premiers at their meeting to discuss Canada's climate change strategy.
Provides $675 million over five years to "modernize and revitalize" CBC-Radio-Canada.
Boosts the Guaranteed Income Supplement for single, low-income seniors of up to $947 annually.
Funds a $112-million homelessness strategy, as well as funding for new spaces and support for people fleeing domestic violence.
The budget does not, however, provide additional transfers to the provinces to address rising health care costs.

It does reallocate $3.7 billion for large-scale capital spending planned for the Canadian military between 2015-16 and 2020-21, pushing it off to later years. 

The government argues this is not a reduction in the defence department's budget, but a shifting of the spending forward to the years when the military expects to be ready to make these purchases.

Higher deficits throughout mandate

All this spending takes its toll on the budget balance, adding $11 billion to the federal deficit in 2016-17 alone, bringing it to $29.4 billion.

The Liberal election campaign promised modest deficits of $10 billion annually to fund infrastructure spending, with a return to balanced budgeting by the next election, expected in 2019.

No return to black ink is projected in Morneau's five-year forecast.

However, Morneau's budget speech emphasizes that by the time of the next election, Canada's debt-to-GDP ratio, a measure of how affordable Canada's deficit spending is relative to the strength of the economy, should be lower than it is today, albeit only slightly.

The federal deficit calculations, however, are based on economic growth forecasts significantly more pessimistic than an average of private sector forecasts. 

That effectively adds $6 billion to the deficit. 

If the economy does not stagnate or decline further to the extent of these worst-case scenarios, the Liberals could outperform their gloomy deficit forecasts down the road.

 

[clam linguine]

4 minutes ago, DonLever said:

 

They did lie about it because during the election they said they will only run a deficit of $10 Billion.

never mind

[Warhippy]

Oh crap, Lisa Raitt stepping up claiming that there was in fact a surplus...blech.  Listening to the Conservatives talk about the budget is almost sickening knowing how they hid their budgets in omnibus legislation.

 

Claiming they raised taxes, claiming they took $ from here and there...seriously?

 

Come on Raitt...are you kidding us?  Demanding to know when the government will stop borrowing?  Why wouldn't you answer those same questions while in power

[Electro Rock]

Its a good thing this wasn't the Conservatives or even the NDP announcing a deficit of that size, or the Liberal shills here, in the media, in various institutions etc, would be throwing a hissy fit.

 

Its good to have an unrivaled propaganda machine at your side.

[thejazz97]

Can someone do a Cole's Notes version on how it breaks down?

[Warhippy]

2 minutes ago, thejazz97 said:

Can someone do a Cole's Notes version on how it breaks down?

See below.

 

14 minutes ago, Warhippy said:

The first budget from Justin Trudeau's government finds the Liberals compromising some of their election promises to keep others, laying out a longer and larger string of deficits to begin the kind of long-term investments they say Canada needs.

While the big ticket items match the platform that helped the Liberals win a majority last October, other commitments aren't ready to roll out.

Finance Minister Bill Morneau called the plan "reasonable and affordable," despite the red ink washing across the otherwise sunny tone of his rookie budget.

"Canadians told us two things: they said 'help me and my family' and 'make investments for the future'," he told reporters before delivering his budget speech. 

"What we're also going to do is be prudent along the way."

The budget centres on a suite of moves to help the middle-class Canadians: a focus of Liberal attention for months. A tax cut passed in December lowered the middle-income tax rate by one and a half points and brought in a new top tax bracket for high earners.

New family benefit starts in July

A new tax-free Canada Child Benefit starting July 1 will increase payments for most Canadians with children, simplify the tax codeand offer greater assistance to lower-income families.

It replaces both the income-tested tax-free Canada Child Tax Benefit and the Universal Child Care Benefit, which was taxable.

Families with incomes under $30,000 will receive the maximum benefit of $6,400 per child under six and $5,400 per child between six and 17, a gain of about $2,500 a year per child.

As incomes rise, the benefit will be progressively clawed back, and eliminated entirely for households earning more than $190,000.

The $4.5-billion net cost of the program for the coming year is partially offset by the elimination of the Conservatives' income splitting for families, a measure that would have cost the treasury $1.9 billion.

Tax credits for children's fitness and arts expenses also are being phased out over two years, with maximum eligible expenses cut in half for 2016 and eliminated entirely in 2017.

Billions for infrastructure, Indigenous peoples

The 2016 budget begins fulfilling the Liberal pledge to spend $120 billion on new and existing infrastructure over 10 years.

Phase one will focus immediately on public transit, water and wastewater systems, and affordable housing, something Trudeau himself admitted last week was "unsexy."

Later investments will be "broader and more ambitious," the budget promises, focusing on the government's goal of shifting to a low-carbon economy and positioning Canadian cities to be more competitive internationally.

The budget allocates $8.4 billion over five years to help bring about "transformational change" in the socio-economic conditions of Canada's Indigenous peoples and their communities.

That includes $2.6 billion to improve primary and secondary eduction on reserves. 

A further $635 million over that span will go to improve family and child services, a figure welfare advocate Cindy Blackstock said falls short of the spending necessary to bring services for First Nations children in line with non-Indigenous services.

In the next two years, $500 million has been allocated to improve First Nations housing and another $225 million for on-reserve infrastructure. 

Other funding targets improvements in drinking water and waste management.

EI overhaul, but no corporate tax cut

The budget also takes significant steps to overhaul the employment insurance system, something forecast to cost over $2.4 billion over the next two years.

But it does not change the corporate tax rate for small businesses, a move much-discussed during the fall election campaign. Morneau told reporters Tuesday that what businesses really need is an economy that works, while the middle-class consumers businesses rely on will see their circumstances improve with the budget's measures.

Budget promises big changes for federal bureaucracy

The 2016 budget also:

Increases programs to assist injured veterans, and restores 9 previously closed veterans affairs offices.
Provides new investments to promote scientific research, including a $2 billion fund for post-secondary institutions to modernize their facilities.
Increases Canada Student Grant amounts by 50 per cent for students from low and middle-income families and part-time students.
Rolls out a $2 billion low carbon economy fund, announced earlier this month with Canada's premiers at their meeting to discuss Canada's climate change strategy.
Provides $675 million over five years to "modernize and revitalize" CBC-Radio-Canada.
Boosts the Guaranteed Income Supplement for single, low-income seniors of up to $947 annually.
Funds a $112-million homelessness strategy, as well as funding for new spaces and support for people fleeing domestic violence.
The budget does not, however, provide additional transfers to the provinces to address rising health care costs.

It does reallocate $3.7 billion for large-scale capital spending planned for the Canadian military between 2015-16 and 2020-21, pushing it off to later years. 

The government argues this is not a reduction in the defence department's budget, but a shifting of the spending forward to the years when the military expects to be ready to make these purchases.

Higher deficits throughout mandate

All this spending takes its toll on the budget balance, adding $11 billion to the federal deficit in 2016-17 alone, bringing it to $29.4 billion.

The Liberal election campaign promised modest deficits of $10 billion annually to fund infrastructure spending, with a return to balanced budgeting by the next election, expected in 2019.

No return to black ink is projected in Morneau's five-year forecast.

However, Morneau's budget speech emphasizes that by the time of the next election, Canada's debt-to-GDP ratio, a measure of how affordable Canada's deficit spending is relative to the strength of the economy, should be lower than it is today, albeit only slightly.

The federal deficit calculations, however, are based on economic growth forecasts significantly more pessimistic than an average of private sector forecasts. 

That effectively adds $6 billion to the deficit. 

If the economy does not stagnate or decline further to the extent of these worst-case scenarios, the Liberals could outperform their gloomy deficit forecasts down the road.

 

To sum it up, I feel as though a lot of first year promises were backed away on.  Number one is the small business reduction which is staying at 10.5% among other things.

 

This is not a perfect budget, but much like any new government it is their first year; the numbers were worse off than we were lead to believe.  And with a budget predicated on a 0.4% growth index, any uptick in the economy will be a win for the government and the people as it will reduce that deficit number

[Electro Rock]

The other thing is that all but a token share of that money is bound to be spent in the East.

[thejazz97]

3 minutes ago, Warhippy said:

See below.

 

To sum it up, I feel as though a lot of first year promises were backed away on.  Number one is the small business reduction which is staying at 10.5% among other things.

 

This is not a perfect budget, but much like any new government it is their first year; the numbers were worse off than we were lead to believe.  And with a budget predicated on a 0.4% growth index, any uptick in the economy will be a win for the government and the people as it will reduce that deficit number

Thanks... I'll have to read that when I get home

[Ryan Strome]

20 minutes ago, Warhippy said:

No...they said that their deficits would be $10 billion depending on the actual numbers.  they were ALWAYS clear about that being predicated on what the factual numbers said.

 

And the numbers, I might add were far and way worse than what the Conservatives told the nation they were

There certainly wasn't a 20 billion dollar gap.

[Ryan Strome]

I see small business is pissed off because the tax rate didn't change like Trudeau promised.

 

I guess that means small business now hates liberals, conservatives and the ndp...

[Ryan Strome]

31 minutes ago, thejazz97 said:

Watch it be a surplus in three/four years

Highly unlikely.

[Hugor Hill]

Ultimate our economy depends on whats happening with the rest of the world.

 

Wish things are simpler and more straight forward.