Deficit could hit $30 billion in maiden Trudeau Liberals’ budget: opposition

The deficit could be as high as $30 billion when the governing Liberals release their maiden budget on Tuesday.

According to the party, Prime Minister Justin Trudeau’s first budget will aim to reduce inequality while laying the groundwork for long-term economic growth. Since the fall, federal revenues have darkened, largely from the oil-price shock.

The Liberals have stated they intend to go ahead with billions of dollars of economy-boosting measures, such as an enhanced child-benefit plan and infrastructure spending.

But opposition critics are already calling the government’s fiscal plan short-sighted.

The Liberals have been hinting that the deficit will be much higher than the $10-billion promised during the election campaign. However, the Conservatives suggest the deficit could be as high as $30 billion.

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The ballooning deficit is partly due to the slowing economy and low oil prices, but also because of big spending pledges to stimulate the economy and help the middle class.

Conservative MP Gerard Deltell warns the budget deficit threatens to be a “real mess” for the economy. Fellow Tory MP Tony Clement told 680 NEWS a large increase in spending is the wrong route to take.

“There is no fiscal responsibility. It will mean higher taxes, as well as a bad economy,” Clement said.

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While opposition parties will criticize the budget and the large deficit that comes with it, Maclean’s Ottawa bureau chief John Geddes said their arguments may have trouble getting traction since the parties have turned against their own identities in recent years.

Geddes points out the typically fiscal-minded Conservatives posted the largest deficits in Canadian history, and the normally big spending New Democrats called for balanced books in the last election.

“Opposition parties are saddled with the problem of trying to get over the hump of the way they’ve allowed they’re brand, they’re identities to be eroded,” he said.

Geddes adds even big banks like the CIBC are calling for even more stimulus, driving home the need spending during this economic downturn.

And while Canadians may feel a little “sticker shock” when the Trudeau government unveils it budget, CIBC economist Royce Mendes told 680 NEWS given the rough shape of the economy Canadians shouldn’t be afraid of a fiscal jump start.

“In the current context, it’s not really appropriate to have that type of aversion,” Mendes said.

With weak opposition and support from the big banks, Geddes said the Liberals will likely avoid a rough ride with the budget and selling it to Canadians, despite a soaring deficit.

Finance Minister Bill Morneau said last month the Liberals believe the economic downturn makes their plan to grow the economy even more relevant than it was during the election campaign.

In his budget speech, Canadians can expect Morneau to refer to helping the so-called “middle class” by gradually creating conditions that will allow it to thrive as the country’s population ages.

The Liberals have said their infrastructure program will focus on maintenance and repair work over the next two years before shifting to larger projects aimed at increasing long-term growth and guiding Canada toward a low-carbon economy.

The budget is also expected to include measures to fight climate change, boost affordable housing and help innovators transform research and ideas into stronger productivity and growth.

First Nations will be looking for the government to keep pledges that include ending all boil-water advisories on aboriginal reserves within five years and delivering on recommendations from the Truth and Reconciliation Commission.

Last week, Prime Minister Justin Trudeau announced the budget will restore, as promised, the eligibility for old-age security to 65, from 67.

With files from Cormac MacSweeney