Freeland doesn’t commit to meeting her own deficit target in fall economic statement

OTTAWA — Finance Minister Chrystia Freeland has not committed to meeting the $40.1-billion deficit target she set for the government last year, as the Liberal government appears to unshackle itself from constraints on spending ahead of a federal election.

Freeland said Tuesday she expects the fall economic statement, which she will present on Dec. 16, will show a declining debt-to-GDP ratio.

“In next week’s fall economic statement, you will see that the government is maintaining its fiscal anchor. Specifically, reducing the federal debt as a share of the economy over the medium term,” Freeland told reporters in a news conference.

The finance minister said she expects to meet the 42.1 per cent debt-to-GDP ratio projected in the spring for the 2023-24 fiscal year.

When asked if she would also meet her deficit target, Freeland wouldn’t answer.

“I chose my words with care, because it is important to be clear with Canadians. It is important to be clear with capital markets,” she said.

The finance minister announced a set of fiscal guardrails last fall in response to pressure from the Bank of Canada and economists to avoid fuelling inflation with too much spending.

Freeland now appears to be ditching at least one of those guardrails, which was to keep the deficit at or below $40.1 billion for the previous fiscal year. The apparent pivot away from reining in the deficit comes as the Liberals look for ways to win back favour with Canadians on affordability.

The parliamentary budget officer projected the deficit would be $46.8 billion for the 2023-24 fiscal year.

Robert Asselin, a senior vice-president at the Business Council of Canada, accused the government of “losing control of public finances” in a statement.

“You can’t pick and choose fiscal anchors as you go, and renege on a commitment you made only a year ago,” said Asselin, who served as a budget director to former finance minister Bill Morneau.

Freeland defended the Liberals’ handling of federal finances, arguing that a declining debt-to-GDP ratio “by definition” means the government’s fiscal position is sustainable.

The finance minister offered few details on what would be in the fall economic statement, saying it would be focused on housing, affordability and economic growth.

Prime Minister Justin Trudeau announced last month the federal government will temporarily lift the GST off a list of items to reduce costs for families over the holidays.

The Liberals also proposed sending $250 payments in the spring to Canadians who worked in 2023 and earned less than $150,000. It’s unclear whether the Liberals will be able to follow through with that proposal, as no opposition party has offered its support for the measure.

The attempt to put more money directly back into most Canadians’ pockets comes as the Conservatives maintain a double-digit lead over the Liberals in public opinion polls. The next federal election must take place by October 2025.

Housing Minister Sean Fraser announced on Tuesday the fall economic statement will propose doubling the loan limit for homeowners who want to add a secondary suite to their home, to $80,000 up from $40,000.

The program, which will launch Jan. 15, will offer 15-year loan terms at a two per cent interest rate.

This report by The Canadian Press was first published Dec. 10, 2024.

Nojoud Al Mallees, The Canadian Press