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

Trudeau has won the most seats — but not a majority. What happens next?

Trudeau will have to deal with some of the implications of Monday’s result

LIVE MAP: Results in Canada’s 2019 federal election

Polls are now closed across the country

ELECTION 2019: Here are the results from our 12 B.C. races to watch

Incumbents mostly won our 12 key races, but there were a few upsets too

MAP: Abbotsford’s five biggest new building projects of 2019

New apartment buildings dominate the list of 2019’s most valuable building permits

Alleged RCMP secret leaker must live with parents in Abbotsford while on bail

Cameron Ortis, 47, is charged with violating the Security of Information Act

In the news: Liberals eke out a win, but will need NDP, Green support to pass bills

Conservatives say they are ready if Trudeau should falter

‘Wexit’ talk percolates day after Liberals returned to power with minority

An online petition is calling for a western alliance and Alberta to separate

Owner of seafood company pleads guilty to illegally importing fish into U.S.

‘We would not put customer health and safety at risk’: Seven Seas Fish

Vancouver artist casts bronze ‘replacement’ egg for defaced Dali sculpture

Artist Richard Forbes installed the new egg after the original was stolen

Federal election saw 66% of registered voters hit the polls across Canada

Roughly 18 million people cast their ballots, voting in a Liberal minority government

‘Inconsistent’ message on climate change hurt Liberals at the polls: SFU prof

Trudeau government will have to make concessions to hold onto power

Opposition to Trans Mountain won’t change, B.C. minister says

Pipeline projects proceed under minority Trudeau government

Remains found under Kamloops street belong to woman who lived five centuries ago

Woman was between ages of 50 and 59, gave birth at least once, was right-handed

Greta Thunberg to attend post-election climate strike in Vancouver

Sustainabiliteens Vancouver strike expected to emphasize need for cross-party collaboration

Most Read