The federal government must not aim at a balanced budget at all costs, but rather continue to take into account the return on its public spending when it goes into debt, as is currently the case, argued the Minister of Public Services and Supply, Jean-Yves Duclos.
“There is what it costs, but also what it brings in,” he declared Wednesday the day after an economic statement that his colleague Minister of Finance, Chrystia Freeland, continues to sign in red ink, that of deficits.
Mr. Duclos, who was a long-time professor of economics at Laval University, was questioned upon his arrival at the Liberal caucus about his level of comfort when the increase in interest rates will lead the government to spend no less of $46.5 billion in interest for the current fiscal year.
The Liberals, who have no plan to return to balanced budgets, have set the objective of keeping deficits below 1% of GDP from 2026-2027.
The liberals, he insisted, pursue the same objective as “all economists”, namely to reduce over time the ratio of debt to gross domestic product (GDP), an indicator which makes it possible to quantify the production of wealth of a country.
“It’s the same thing for a family or for a couple,” he illustrated. If your income doubles and your mortgage increases by 50%, well, you are more capable of repaying the mortgage. »
A few minutes later, Prime Minister Justin Trudeau also affirmed that his government is “investing” in order to “create economic growth”.
He mentioned in passing the funds allocated to housing or to the “economy of the future” with the Northvolt and Volkswagen factories.
“We continue to demonstrate fiscal responsibility,” he continued. We have the best debt-GDP ratio in the G7. We have the lowest deficit in the G7. We continue to have an AAA rating from rating agencies. We are on a responsible path and we are helping Canadians. »
“It doesn’t make sense”
However, the Conservatives do not see it that way, and their leader Pierre Poilievre briefly appeared before journalists to criticize the Liberals for their update which makes “no common sense”. This boils down, according to him, to “more debt, more inflation, more interest, more taxes”.
“The cost of housing has doubled, rent has doubled, mortgages have doubled, the first payments required for a mortgage have doubled,” he said. This is the result of his programs. And what does Justin Trudeau want to do? He wants to add more. »
To one of the few questions he answered, Mr. Poilievre said that if elected to power, he would pass “common-sense legislation that will force my government to find a dollar of savings for every new dollar of spending.” This, he said, is how “single mothers and small businesses” manage their budgets.
Although the fall economic statement presented Tuesday provides for $2.1 billion per year in new spending, on average, over five years, it still shows a certain restraint.
The document mainly focuses on new proposals to address the housing crisis. Ottawa is notably injecting an additional $15 billion into a loan program for the construction of apartments as well as $1 billion for affordable housing. It also extends to cooperatives the measure aimed at exempting the construction of rental housing from the GST.
The federal government projects the deficit for the current fiscal year to be $40 billion, virtually unchanged from its spring budget forecast, with deficits shrinking, but not disappearing, over five years.