Canada’s Parliamentary Budget Officer Yves Giroux says that the deficit will soon become unsustainable if the Trudeau government continues its current spending levels.
On Sunday, Giroux warned that any new spending commitments without a plan to decrease the deficit might spell fiscal disaster.
“It’s without a doubt that we cannot afford deficits of over $300 billion for more than just a few years. And when I say a few years, I really mean a year or two. Beyond that, it would become unsustainable,” he said.
“So if the government has plans for additional spending, it will clearly have to make difficult choices and either raise taxes or reduce other areas of spending. Because it’s clear that we cannot afford to have deficits of that magnitude for even the medium term.”
Ahead of the throne speech on September 23, Prime Minister Justin Trudeau has hinted of an “ambitious green agenda.” Trudeau has advised his cabinet ministers and bureaucrats to “reimagine Canada.”
One Liberal insider told CBC that the cost of these new promises are “on a scale we haven’t seen before.”
Over the course of the coronavirus pandemic, the Liberals have let the deficit balloon to nearly $400 billion. The government currently has no plans to return to a balanced budget.
“What’s concerning is the absence of a longer-term plan,” Giroux told Global.
“That is concerning to me and to most people who are concerned about public finances.”
While Trudeau has said that the government is not looking at raising taxes, it’s unclear how Canada will be able to meet its future debt obligations without tax hikes or radical cuts.
Giroux, the non-partisan officer who gives objective analysis on Canada’s finances, says that with the worst of the pandemic is over, Canadians should already know the government’s long-term fiscal strategy.
“As the crisis is evolving and we are in months three, four, five, six and seven of this crisis, I think it’s reasonable for Canadians to expect more from the government in terms of what’s the plan going forward.”