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PostPosted: Wed Jan 04, 2017 10:19 pm    Post subject: federal budget might not balance until 2055 Reply with quote

( yikes ! , sadly I was this article was a piece of fiction but its not and that is what is truly concerning , trudeau is taking Canada over a cliff and there might be no way back )

Buried government report reveals looming fiscal crisis

anthony furey
By Anthony Furey, Postmedia Network
First posted: Wednesday, January 04, 2017 06:35 PM EST | Updated: Wednesday, January 04, 2017 06:43 PM EST

A shocking new report quietly released by the federal government admits that their finances could collapse in the coming decades if politicians don’t make responsible choices.

Two days before Christmas, when most politicians and their staffers had long left their offices for the holiday break, the finance department released — without fanfare or wide notice — a surprising update on long-term economic and fiscal projections.

The report warns that lower than expected growth combined with higher program spending “would be sufficient to put at risk the fiscal sustainability of the federal government.”

Ian Lee, who teaches at the Sprott School of Business at Carleton University, says Canadians should certainly be worried about these numbers.

“I’m old enough to remember when Pierre Elliott Trudeau first took us into deficits, which were much smaller ones than they are today,” Lee told the Toronto Sun in a telephone interview. “Everybody back then said ‘What’s the big deal?’ But the problem is that debt started to snowball and get out of control. It’s so difficult for politicians to say no and to make hard, difficult choices.”

The forecast also assumes that the budget won’t be balanced until 2055. Projections show it peaking at $38.8 billion in 2035.

This goes against a key Liberal campaign promise.

During the 2015 election, Justin Trudeau pledged to balance the budget before the next election, in 2019. Yet, in the fall fiscal update announced this past November, Trudeau’s Liberal government pushed the goal posts back and projected deficits until 2021 and beyond.

These new assumptions from the finance department now call all of the Liberal government’s numbers into question.

This is not the only alarming figure revealed.

Another key fiscal promise of the prime minister’s campaign was to bring down the debt-to-GDP ratio to 27% by 2019. Yet the finance report also places this accomplishment out of reach.

It instead projects the debt ratio consistently hovering around 31% for the next few years, then dropping to 30.4% by 2021.

Federal debt is also assumed to cross the $1 trillion mark around 2031. It is currently $635 billion.

“The report is very concerning, but it’s not surprising,” Conservative finance critic Gerard Deltell told the Sun. “We already know that Justin Trudeau’s tax-and-spend plan has failed. Full-time jobs are disappearing, taxes higher, and the only solution the Liberals have to offer is more of the same.”

These alarming forecasts are the result of the report’s authors factoring in Canada’s ageing population into its financial outlook. Over the coming decades, an increasing number of baby boomers will move into retirement while relying on fewer workers in younger cohorts to bankroll government services.

“What really concerns me is that they’re borrowing for current spending,” adds Lee. “It’s one thing to borrow to buy a house. It’s another thing to borrow to buy groceries. They’re borrowing to finance consumption instead of long-term assets. I don’t think it’s going to end well.”

The report is not all doom and gloom, though. It acknowledges there are upsides should growth improve and points out that government could make financially-sound choices to send the numbers in more optimistic directions.

“While no single initiative can guarantee sustainable growth in our prosperity, the potential payoff from acting now in a broad range of policy areas is very large, as measures tend to reinforce themselves over time,” the document advises.

•Returning to surplus

Trudeau’s campaign promise: 2019

Finance department’s forecast: 2055

•Reducing the debt ratio

Trudeau’s campaign promise: down to 27% by 2019

Finance department’s forecast: still up at 30.4% by 2021

•Still not balancing itself

“The commitment needs to be a commitment to grow the economy and the budget will balance itself.”

— Liberal leader Justin Trudeau, 2014

•Gloomy future

“I don’t think it’s going to end well.”

— Ian Lee, Carleton University

•Federal debt projections

-2017: $635 billion

-2021: $746 billion

-2030: $992 billion

-2045: $1.5 trillion


Joined: 02 Mar 2009
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Location: Ontario

PostPosted: Thu Jan 05, 2017 9:58 am    Post subject: Reply with quote

this story just broke last night and only seems to have been in the Sun , but the higher ups in Ottawa ( cabinet and PMO ) must have had these numbers much earlier

I have often said the liberals were acting like people who won the lottery often do , spending wilding with no care and act like there is not tomorrow , until they check the bank balance and find out the money is all gone , many people who win the lottery actually end up going broke a few years down the road . but of course this is the federal government and its got many ways to bring in revenue and isn't going to go broke but is racking up debt and the budget shows no signs of ever balancing .

it will make the next budget very interesting , much of trudeau's support has been based around him being the one to say YES to any request for money , be it from a municipality or province etc . his mp's don't want to go back to there home ridings and have to say NO we don't have the money for the new arena anymore and see there popularity slide

but its clear they have to make some tough choices or risk a long term financial disaster and its not clear what they will be ?

Joined: 02 Mar 2009
Posts: 8352
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votes: 3
Location: Ontario

PostPosted: Thu Jan 05, 2017 3:35 pm    Post subject: Reply with quote

Ottawa projects decades of deficits as federal finances worsen

Bill Curry

OTTAWA — The Globe and Mail

Published Thursday, Jan. 05, 2017 11:37AM EST

The federal government is projecting decades of deficits as a new Finance Canada report shows Ottawa’s long-term finances have deteriorated considerably over the past two years.

The government’s latest long-term fiscal forecast adds new context to the federal government’s reluctance to boost provincial health transfers.

The decades of surpluses projected by Ottawa just two years ago have now shifted to decades of annual deficits that will run until 2050.

The report from Finance Minister Bill Morneau’s department marks the first time the federal government has updated its long-term fiscal projections since the fall of 2014. At that time, the price of oil was in the midst of a steep decline that would ultimately deliver significant pain to the Canadian economy.

Those persistently low oil prices – combined with declining labour force participation due to an aging population and a new federal Liberal government that champions the merits of deficit spending – have all contributed to a shift in Ottawa’s fiscal horizon.

In its 2014 report, Finance Canada said the federal debt as a share of GDP was expected to be eliminated entirely before 2040, placing federal finances in an enviable position compared with other governments provincially and internationally. However, in the latest federal report – released quietly online on the Friday before Christmas – the federal debt is no longer on track for elimination.

Instead, the new projections for economic growth and government spending would see the federal debt shrink slightly over time below 31.8 per cent of GDP, where it stands currently.

The December report projects spending and revenue trends through to the 2055-56 fiscal year. Such long-term projections are subject to considerable volatility. Relatively small changes in economic growth or government spending over time can significantly shift the trend lines for Ottawa’s bottom line. The projections also do not take into account future policy decisions.

As an illustration of this volatility, the recent Finance Canada report shows that a boost in Canadian productivity in line with trends in the U.S. economy, combined with reduced government spending growth equal to a quarter of a percentage point less a year, would see the federal debt eliminated by 2050.

Conversely, boosting government spending growth by a quarter percentage point “would be sufficient to put at risk the fiscal sustainability of the federal government.”

Under that scenario, the federal debt as a share of GDP would rise over time to more than 50 per cent by 2055.

Finance Canada’s report assumes that the Canada Health Transfer (CHT) payments to the provinces and territories will grow in line with nominal GDP.

Worth $36-billion this year, the CHT is a major federal expense. Changes in the growth rate can have major implications for the health of federal and provincial finances. The Parliamentary Budget Officer has stated that Ottawa’s decision to move away from fixed annual increases of 6 per cent was a major factor in placing federal finances on a sustainable footing over the long term. However, the PBO also said the decision will burden provincial governments with a future of rapidly rising debt unless those governments raise taxes, cut spending or find a combination of those two options.

Ottawa and the provinces are currently at odds over the size of the CHT transfer. Provinces rejected a federal offer in December that would have shifted the growth in transfers away from a formula tied to nominal GDP growth – which combines real GDP and inflation – in favour of a fixed increase of 3.5 per cent a year. Ottawa also offered $11.5-billion over 10 years outside of the transfer for spending focused on home care and mental health.

Since then, New Brunswick, Nova Scotia, and Newfoundland and Labrador have accepted a similar federal offer that provides additional money for home care and mental health while tying the CHT transfer increase to nominal GDP growth or 3 per cent, whichever is higher. The side deals state that should the other provinces negotiate a better deal with Ottawa, the three provinces would adopt those terms.

The remaining seven provinces and three territories wrote to Mr. Morneau and federal Health Minister Jane Philpott to request a first ministers meeting of premiers and Prime Minister Justin Trudeau to resolve the standoff.

Conference Board of Canada chief economist Craig Alexander said the report shows Ottawa does not have much fiscal room to boost spending on transfers or other issues. While the report projects the debt-to-GDP will not grow during the projection period, he noted that could change quickly in the event of a recession. Mr. Alexander said he would like to see Ottawa set a clear target for returning to balance in the medium term.

“I do think there is a legitimate case to be made for running deficits at the moment, but we should also recognize that, ultimately, sound fiscal practice requires a return to balance,” he said.

The Liberal Party platform promised the size of annual deficits would be kept at “less than $10-billion in each of the next two fiscal years.” However, Mr. Morneau’s fall fiscal update said the deficit would reach $27.8-billion next year before declining to $14.6-billion in 2021-22.

Mr. Morneau had mused in March that if his budget succeeded in boosting economic growth, “we get to balance in the coming five years.” However, the minister has repeatedly declined to repeat that timeline in recent months.

His department’s December report shows the deficit climbing again in the 2020s and 2030s to a high of $38.8-billion in 2035-36 before returning to surplus in the mid-2050s.

When measured as a share of the economy, the deficits are relatively small at 1.1 per cent or less over the projection period.

In contrast, the 2014 forecast projected large surpluses every year, growing to $220.4-billion in 2050. As a share of GDP, the 2014 forecast had the size of the surplus growing from about 0.5 per cent in the 2020s to 2.9 per cent by 2050.

Annie Donolo, a spokesperson for Mr. Morneau, said the report shows the impact of the long period of slow growth on Ottawa’s bottom line. She said it also shows federal finances are sustainable over the long term.

Conservative finance critic Gerard Deltell said the decades of deficits go far beyond the few short years of small deficits promised by the Liberals during the election campaign.

“This is the gift that we give to our children and grandchildren,” he said. “In only one year, they have proved without a shadow of a doubt that they have no control of public spending.”


Joined: 02 Mar 2009
Posts: 8352
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Location: Ontario

PostPosted: Fri Jan 06, 2017 10:35 am    Post subject: Reply with quote

January 06, 2017

Trudeau to run deficits until 2055: Canada’s fiscal sustainability at risk

Brian Lilley
Rebel Co-Founder

Remember that promise Justin Trudeau made about running three small deficits? We called it a lie when he said it but, how big a lie are we talking?

Well a new report from the officials inside the finance department says the Feds will be running deficits until 2055.

Watch as I lay out the details of Jr. Trudeau's bad spending plan that will empty your pockets for decades to come.

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