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

PHOTOS: Alberta male team takes silver in Winter Games relay speed skating

Alberta was close behind Quebec in the team relay speed skating finals

Lacombe Police Service respond to car theft at Greenway Inn

Suspect is still outstanding and the investigation is ongoing

Lacombe Police Service responds to attempted car theft

Two suspects departed scene in a silver 2000 Dodge Caravan

Alberta was crowned champions in Wheelchair Basketball at Canada Winter Games

Ontario won silver while Quebec took home the bronze medal

Lacombe welcomes ‘Napalm Girl’ to discuss journey from hatred to forgiveness

Latest Herr Lecture to feature Kim Phuc Phan Thi at LMC

WATCH: Canada Games Torch Relay lights spark in Lacombe

100s brave blistering cold to support local torchbearers

WATCH: Pet therapy brings calmness to Winter Games athletes

Canada Winter Games in Red Deer continue on until March 2nd

R. Kelly charged with 10 counts of sexual abuse

R&B star has been accused of sexual misconduct involving women and underage girls for years

Child advocacy centre raising funds through Dream Home Lottery

The child advocacy centre in Red Deer uses its resources to help kids all over Central Alberta

Trudeau tells Canadians to listen to clerk in SNC-Lavalin matter

Privy Council clerk Michael Wernick delivered a blunt assessment at the House of Commons justice

Mueller report looming, new attorney general in hot seat

Robert Mueller is required to produce a confidential report to pursue or decline prosecutions

B.C. woman shares story of abuse with church officials ahead of Vatican summit

Leona Huggins was the only Canadian in the gathering ahead of a historic summit at the Vatican

Sylvan Lake’s Megan Cressey misses Freestyle Skiing Big Air podium

Alberta’s Jake Sandstorm captured silver in the men Freestyle Skiing Big Air contest

Why do zebras have stripes? Perhaps to dazzle away flies

Researchers from University of Bristol look into why zebras have stripes

Most Read