Finance Minister Chrystia Freeland presented an economic and budget update that is just that. But what is not a mini-budget still adds some 61 billion in new spending for the five years, including 28 billion for the current year.
Fortunately, the Trudeau government can count on better than expected economic performance. Minister Freeland said Canada has recovered all the jobs lost during the pandemic and even created 6% more. This is much better than in the United States, which only has 83% of jobs posted in 2019. This means that the health and financial strategy deployed by Ottawa and the provinces was the right one.
Thus, thanks to this economic performance, but also to a surge in inflation, the deficit fell from 154.7 billion, as forecast by Minister Freeland in her last budget, to 116.2 billion before the new spending for the current year, an improvement of 38.5 billion. However, 60% of this deficit reduction is spent and finally, the deficit goes back to 144.5 billion.
As we know: the Trudeau government does not aim to return to a balanced budget, sticking to seeing the weight of the debt reduced in relation to gross domestic product over time. For now, this is probably a sensible approach. After five years, he expects to approach balance with a deficit of 13 billion.
The new expenses are justified. They finance an energetic fight against COVID-19, which is the best way to maintain vigorous economic activity and, hence, to preserve tax revenues. We cannot oppose the purchase of rapid screening tests for 1.5 billion nor frown at the 4.5 billion reserved to face the dreaded Omicron variant. In addition, $ 5 billion will go to aid flooded British Columbia.
In the next budget, however, the Trudeau government will have to curb its proverbial lavishness. During the election campaign, the Liberals showed off new commitments totaling $ 78 billion: they should be reviewed. In addition, more than a hundred billion are planned to revive the economy, but by the time inflation is peaking, the time is probably not for stimulating growth. We do not know how tomorrow will be done: caution will therefore be required.