Finance Minister Bill Morneau announced today that the Liberal government is expecting a $26.6 billion deficit for this year, exceeding prior projections of $19.8 billion.
In 2020, the Liberals are projecting an even higher deficit of $28.1 billion.
The fall fiscal update is intended to size up the Canadian economy before the new year.
Part of the reason behind the higher than expected deficit was $10 billion in new spending since the spring budget.
Among the new spending, the government plans on spending $1.8 billion to compensate dairy farmers for losses caused by concessions on Canadian dairy in the new NAFTA agreement.
Another $5 billion was spent on employee pension benefits and an extra $2 billion for the Hiberian oil project in Newfoundland and Labrador. The government is also proposing to raise the Basic Personal Amount (BPA) on income taxes to $15,000 by 2023.
Morneau defended the increased spending by saying that it was necessary in order for Canada to continue moving in a “positive trajectory.”
The report noted that the economy has been growing with increases in wages outpacing inflation. In 2019, employment also grew by nearly 400,000 jobs and the economy is expected to grow an average of 1.7%.
However, economists have warned that Canada is facing a potential recession in the next 12 months. Oxford Economics predict a 40% chance of a recession during this period.
A recent Nanos poll also found that a startling 56% of Canadians think that a recession is “likely” or “somewhat likely” in 2020.
The budgetary update also included a “Gender-based Analysis” summary meant to analyze how identity groups are affected by government policies.
“Gender-based Analysis Plus (GBA+) is an analytical process used to assess how diverse groups of women, men and non-binary people may experience policies, programs and initiatives. GBA+ goes beyond gender to consider additional identity factors such as ethnicity, sexual orientation, age, income level, and mental or physical ability,” writes the budget report.
