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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Bowser attic blaze contained by fire crews

Early-morning stove fire spread to attic

The Old Schoolhouse Arts Centre in Qualicum Beach to re-open on Aug. 11

Hours are Tuesday to Saturday, from 11 a.m. to 3 p.m.

COVID-19: SD69 working on how to organize schools for planned fall re-opening

Qualicum School District required to have plan to ministry by Aug. 26

EDITORIAL: Real communication can solve problems

Neighbourhood dispute in Columbia Beach made headlines

53 new COVID-19 cases, no new deaths cap off week of high infection rates in B.C.

Roughly 1,500 people are self-isolating because they either have COVID-19 or have been exposed to it

Missing teen visiting Courtenay found safe

She had last been seen going for a walk on Aug. 6

Moving on: Tanev scores 11 seconds into OT as Canucks oust Wild

Vancouver beats Minnesota 5-4 to move into first round of NHL playoffs

Fitness non-profit challenges citizens to invent a game to be physically active

The campaign was launched after a study showed only 4.8 per cent of children and youths in Canada met required standards of the 24-hour movement guidelines

Gene editing debate takes root with organic broccoli, new UBC research shows

Broccoli is one of the best-known vegetables with origins in this scientific haze

VIDEO: U.S. Air Force pilot does fly-by for B.C. son amid COVID border separation

Sky-high father-son visit plays out over White Rock Pier

3 Vancouver police officers test positive for COVID after responding to large party

Union president says other officers are self-isolating due to possible exposure

New mothers with COVID-19 should still breastfeed: Canada’s top doctor

Dr. Theresa Tam made the recommendation during World Breastfeeding Awareness Week

Collapse of Nunavut ice shelf ‘like losing a good friend:’ glaciologist

The ice shelf on the northwestern edge of Ellesmere Island has shrunk 43 per cent

Most Read