Finance Minister Bill Morneau tabled a fiscal snapshot today that shows the federal government’s deficit is expected to hit $343 billion this year — an eye-popping figure largely attributed to pandemic-related support programs that have pushed federal spending to a level not seen since the Second World War.
Finance Minister Bill Morneau tabled a fiscal snapshot today that shows the federal government’s deficit is expected to hit $343 billion this year — an eye-popping figure largely attributed to pandemic-related support programs that have pushed federal spending to a level not seen since the Second World War.
The 168-page snapshot offers a short-term economic analysis and a detailed account of what the government has spent already to shore up an economy on life support. It presents little in the way of a long-term plan to return the economy to pre-pandemic normalcy.
“Some will criticize us on the cost of action,” Morneau said in a speech in the House of Commons today. “But our government knew that the cost of inaction would’ve been far greater.
“Those who would have us do less ignore that, without government action, millions of jobs would have been lost, putting the burden of debt onto families and jeopardizing Canada’s resilience.”
WATCH | Opposition leaders respond to fiscal ‘snapshot’:
Opposition leaders and party critics question Finance Minister Bill Morneau about his economic and fiscal ‘snapshot.’ 23:03
The government has rolled out big-ticket items in recent months like the Canada emergency relief benefit (CERB) — to help the sick and unemployed during the pandemic — and the Canada emergency wage subsidy (CEWS) to help businesses keep employees on the payroll amid massive shifts in sales and revenue.
The government also has created the Canada emergency business account (CEBA) to float partly forgivable loans to businesses in need, and has set aside some $9 billion to help students this summer.
What we’ve learned from this fiscal snapshot:
- Deficit for 2020-21 rises to $343.2 billion from $34.4 billion projected before pandemic.
- Net federal debt will hit $1.2 trillion.
- Federal debt-to-GDP ratio is expected to rise to 49% in 2020-21 from 31%
- Direct federal support for Canadians and businesses: $212 billion.
- COVID-19 slowdown has cost the federal treasury an additional $81.3 billion.
- GDP will shrink by projected 6.8% this year — worst since the Great Depression.
- Economy is expected to bounce back by 5.5% next year.
Seniors have received one-time Old Age Security bonuses and families eligible for the Canada Child Benefit got an extra $2 billion in payouts in May.
The government estimates that these programs, and dozens of others, have resulted in $236 billion in new spending to date.
But the government is projecting that, by the end of the 2020-21 fiscal year next March, it will have spent about $469 billion more than planned when it last set spending targets in December 2019.
Wage subsidy to be extended
These numbers are significantly higher than what Parliamentary Budget Officer Yves Giroux projected in June.
Senior finance officials, speaking on background to reporters at a technical briefing, said that is largely attributable to higher projections for uptake of the wage subsidy and the CERB.
One official said the government