Ottawa now expects to post a $19.4-billion deficit this fiscal year and a $18.1-billion deficit in 2018-19. It is projected to decline to $12.3-billion by 2022-23, meaning the Liberals will not deliver on a campaign pledge to balance the books by the 2019 election.
The federal debt will reach $651.5-billion in 2017-18, rising to $730.1-billion by 2022-23.
When measured as a share of the economy, the debt-to-GDP ratio is expected to decline from 30.4 per cent this year to 28.4 per cent in 2022-23.
The government acknowledges that its ambitious plan to spend $180-billion over 10 years on infrastructure is not rolling out as quickly as planned. Unspent money has been pushed ahead into future years.
The budget also gives the green light for VIA Rail to purchase new trains for its principal corridor in Quebec and Ontario. Further money is set aside to keep studying VIA's "high-frequency rail" plan for exclusive passenger-rail tracks in the Quebec City-to-Windsor corridor.
The budget's appeal to women and the promise of a pharmacare study, headed by former Ontario health minister Eric Hoskins, appears to be aimed at center-left voters who might consider voting for the NDP. New leader Jagmeet Singh has vowed to run the next election on a national pharmacare program.
Regional development agencies will receive a total of $1.3-billion over five years, with more than $900-million going to vote-rich Ontario.
"I would consider this to be very much a left-of-centre budget because of the focus on equality," said Craig Alexander, chief economist for the Conference Board of Canada. "If you look at the title of the budget, it's equality and growth. But I would argue that it's about equality in capital letters and growth in small letters."
Conservative Leader Andrew Scheer said big spending Liberal budgets are failing to produce results.
"Justin Trudeau is failing to balance the budget by 2019 as he promised, ensuring that future generations of Canadians will have more and more debt to pay back," he said, in reference to the Liberal Leader's campaign pledge.
The NDP's Mr. Singh called Tuesday's budget a "timid" document that fails to act on pharmacare or close tax loopholes that favour the rich.
"On pharmacare, what the government is proposing is not a plan. It is a fantasy," he said, noting that the Liberals' promised study does not come with a funding pledge.
The Canadian Taxpayers Federation (CTF) today expressed concern about the Trudeau government’s 2018 budget, which did not lay out a clear path to eliminate the deficit and failed to address growing concerns about Canada’s tax competitiveness.
“The good news is this budget largely holds the line on spending,” said CTF Federal Director Aaron Wudrick. “The bad news is the government has once again failed to tackle the structural deficits it created in the 2016 budget and which will add $80 billion in new federal debt by 2022.”
The federal debt is projected to rise to $730 billion by 2022 with debt interest costs alone expected to jump from $26 billion per year in 2018 to $33 billion per year by 2022.
The government’s proposed treatment of small business passive investment abandoned the proposed hard limit of $50,000 on annual passive investment income in favour of a gradual phase out of the deduction limit for annual passive investment income between $50,000 and $150,000.
“The new passive investment rules, combined with the new income sprinkling rules, will still squeeze businesses for more than $1 billion a year by 2020,” said Wudrick. “But it’s fair to say these further revisions are a big improvement over the government’s original proposals.”
Wudrick also noted that the federal budget does not include any measures to respond to the major business tax cuts in the United States which are expected to impact Canada’s ability to attract and retain jobs and investment.
PEI Business Federation however does applaud the changes in EI that appears to address the so-called "hole" in employment insurance to help families in fish processing and tourism make ends meet until the new work season begins which has had a very negative impact on PEI's seasonal workers.
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