Canadian Prime Minister Mark Carney is promising to run deeper deficits to cut income taxes and grow spending on infrastructure to reduce the country’s dependence on the US.
Carney’s plan would push the federal government’s shortfall to C$62.3 billion (US$45 billion) this financial year and add C$129.2 billion (US$93.3 billion) in net new spending over the next four years if his Liberal Party wins the election, according to the party’s election platform, released on Saturday in Ottawa.
Canada’s net deficit as a percentage of gross domestic product is expected to be 1.96 per cent in the financial year that started this month, up from the 1.3 per cent projected in December by the Liberals under former Prime Minister Justin Trudeau. The shortfall as a percentage of GDP is expected to fall to 1.35 per cent by 2028.
“It’s said there are no atheists in foxholes. There should be no libertarians in a crisis,” Carney said at a news conference in Whitby, Ontario.
The largest spending promises include an income-tax cut, defence spending, housing investments and a trade diversification fund to increase Canada’s ability to export to markets other than the US. The plan estimates C$20 billion (US$14.5 billion) in revenues from Canada’s retaliatory tariffs this financial year, which the Liberals say they would redistribute entirely to workers and businesses affected by the US trade war.
Overall, the platform shows Canada’s fiscal position worsening if the Liberals are re-elected on April 28, and the party is currently leading in most polls. Canada is unlikely to improve its debt-to-GDP ratio over the forecast horizon, which was previously a key fiscal guidepost offered by the Liberals under Trudeau.
