Morneau’s Fiscal Update
On November 01, 2016, the Honourable Bill Morneau, Minister of Finance, presented the 2016 Fall Economic Statement. This Statement outlines the current Liberal government’s economic and fiscal projections for the next five years. As expected, the Minister’s report re-confirmed what Canadians have known for months – the current government’s growth plan isn’t delivering results. It also wasn’t a surprise for Canadians that the current Liberal government’s response to this is to spend more money, create more federal agencies, and impose more tax hikes on Canadian workers, taxpaying families, and Canada’s job creators.
In his fiscal update, Minister Morneau and the current Liberal government downgraded their forecasts for economic growth. Finance officials confirm that GDP growth will be lower compared to the projections in Budget 2016 (from 1.4 per cent to 1.2 per cent in 2016 and 2.2 per cent to 2.0 per cent in 2017). These figures follow the report from the Parliamentary Budget Officer that showed job creation over the past year was half what it was over the previous five years and that there has been no net new full-time jobs.
The Fall Economic Statement also shows the current Liberal government is on track to run higher deficits by borrowing $31.8 billion more than planned over the next five years. Weaker economic growth can be attributed to $24.8 billion of the new deficits, but the remaining $7 billion arises from unbudgeted spending and other policy decisions, including the enhanced Canada Pension Plan (CPP). The current government still included the enhanced CPP in its spending even though internal documents from Finance Canada show that officials advised Minister Morneau that higher CPP premiums will reduce job growth until 2035. The CPP tax hike, as well as the carbon tax this government will be imposing will cost Canadian families thousands of dollars every year.
The fiscal update outlines the second phase of the current government’s infrastructure plan that will now cost $81 billion over 11 years, up from $48 billion outlined in Budget 2016 with most of the money only available in later years. This spending includes $15 billion to capitalize the new Canada Infrastructure Bank, which takes money away from Canadian communities. It also remains unclear what problem the Bank is trying to solve. If it’s to encourage private financing, Public-Private Partnerships (PPP) Canada already exists and could be enhanced as needed.
Minister Morneau’s fiscal update also includes spending of $218 million over five years to establish the Invest in Canada Hub, which aims to attract global investment and jobs. It will employ a new, dedicated sales force and will work with trade commissioners and municipal and provincial governments to make the case for global companies to come to Canada. This measure may assist the process of setting up shop in Canada; however, it has little impact on the underlying case for doing business in Canada.
The recent Fall Economic Statement is a clear sign to Canadians that the Liberal economic plan has failed and Canadians are paying for it. Economic growth has been downgraded, fewer full-time jobs are available, and deficits are mounting. The only solution the current Liberal government offers in the recent fiscal update to address these problems is to borrow and spend more. They fail to recognize that spending more taxpayer dollars on their failed plan means that Canadians will be burdened with even more debt and higher taxes.