Federal Finance Minister Bill Morneau has handed down his first budget with a massive deficit of $29.4 billion – three times what had been promised during the election campaign – as the new Liberal government embarks on a stimulus program.
The budget forecasts more than $100 billion in deficits for the next five years, contrary to Prime Minister Justin Trudeau’s election promise to balance the budget in four years. Morneau billed the budget as a plan to “revitalize the Canadian economy” and deliver a tax break to nine million taxpayers, and a more generous, tax-free child benefit.
Conservative leader Rona Ambrose said the finance ministry reported on budget day that the Liberals inherited a $4 billion surplus.
“There was still a surplus in January, and they’ve blown through that in the first 100 days,” Ambrose said. “What we’re seeing now is reckless spending without a job creation plan, and no actual plan in the budget to return to a balance.”
NDP leader Thomas Mulcair took aim at Morneau’s plan to target additional Employment Insurance coverage to areas of the country hit hard by the slump in oil and commodity prices.
“Right now there are 850,000 people who have lost their jobs who are not even eligible for EI,” Mulcair said. “The budget only takes care of 50,000 of them.”
Metro Vancouver mayors hoping for big infrastructure grants for rapid transit expansion may be disappointed that much of the future stimulus money will be back-end loaded in a second phase of grants after the next federal election.
A $370-million initial investment for Metro Vancouver transit is included and will assist TransLink in improving bus service and SkyTrain across the region.
The budget also indicates Ottawa can contribute up to 50 per cent of future capital funding, instead of the one-third from each senior government that was the practice in the past.
Big ticket items in the budget include the reduction of middle class tax rates – from 22 to 20.5 per cent for the $45,000 to $90,000 income bracket. Only part of that is offset by an increase in the tax rate for income over $200,000 from 29 to 33 per cent.
The budget also includes $8.4 billion for aboriginal communities.