Liberals meeting fiscal goals, but inherited $18B baseline deficit, Trudeau says
Conservative MP points to parliamentary budget officer's testimony deficit was $1B and due to Liberal spending
Prime Minister Justin Trudeau insisted Tuesday that his Liberal government has been keeping its promise to be fiscally responsible and blamed the previous Conservative administration for being at least partly responsible for higher-than-expected deficits.
Trudeau maintained the Liberals remained consistent with their 2015 election commitment to add about $10 billion in new spending for 2016-17, their first full year in office.
He argued, however, that the Liberals had to deal with a baseline deficit of $18 billion after coming to power, even though their Tory predecessors had predicted a balanced budget.
The Tories have long disputed Liberal claims that they left the country in the red at the time of their electoral defeat, which came part way through the 2015-16 fiscal year.
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In trying to make his case Tuesday, Trudeau re-ignited the bitter political debate over the post-election state of the public books that raged between Liberals and Tories long after the election.
"We just went from a floor where the budget was balanced, because supposedly the Conservatives had balanced the budget, to what was the reality of our budget of being at about $18 billion in deficit at the end of that first year," Trudeau told a news conference.
"So, we've been consistent with our plan and our approach."
When asked about Trudeau's comments, a spokeswoman for Finance Minister Bill Morneau later said that, when the Liberals formed government, Ottawa's books were facing a baseline deficit of $18.4 billion for 2016-17.
The fiscal impact left behind by the Tories was a $1-billion deficit that affected the bottom line in 2015-16, Chloe Luciani-Girouard wrote in an email.
'This is all wrong': Conservative MP
Earlier this month, Trudeau told Global's West Block that a combination of low oil prices and the "economic situation the Conservatives left us" left the Liberals facing a bigger shortfall than anticipated.
Each party held power for several months in 2015-16, a year marked by economic disappointment primarily linked to the weak global economy and low oil prices.
In fiscal 2015-16, which was partly under the Conservative government and partly under the Liberals, Ottawa ended up posting a deficit of $1 billion. The Harper government had projected a surplus of $1.4 billion for that year.
The Tories blamed the eventual shortfall on fresh spending by the Liberals.
On Tuesday, Tory MP Gerard Deltell pointed to testimony last fall by the parliamentary budget officer. Jean-Denis Frechette told a House of Commons committee that Ottawa would've posted a small surplus in 2015-16 — instead of the slim shortfall — had it not been for new Liberal spending measures.
Deltell said he didn't know how Trudeau came up with the $18-billion deficit number.
"Did he find it in a Cracker Jack (box), or what? Because this is all wrong," he said Tuesday in an interview.
Deltell got personal in his criticism, which points to just how sensitive the debate over the Harper government's budgetary legacy has been.
"For me, it's no surprise because the guy said two years ago that the budget balances by itself, which was totally stupid," Deltell said.
"When we talk about numbers, the prime minister is not exactly the best person and the most accurate person in Canada to talk about it."
Platform called for maximum $10B deficits
The Trudeau government has faced repeated attacks for a budgetary outlook that project several years of deficits, including a shortfall of $23 billion for 2016-17 and no timeline to balance the books. The final 2016-17 figures are expected in the fall.
This fiscal year, the Liberal government is predicting a deficit of $28.5 billion, including a $3-billion accounting adjustment for risk.
The Liberals have also been criticized for abandoning fiscal pledges from their election campaign.
They won on a platform that vowed to run annual shortfalls of no more than $10 billion over the first three years of their mandate and to eliminate the deficit by 2019-20.
A federal report, published on the Finance Department website in December, predicted that, barring any policy changes, Ottawa could be on a path filled with annual deficits until at least 2050-51.
On Tuesday, the prime minister refused once again, however, to say when the books would actually be balanced.
"We made the decision ... in the last election that instead of focusing on balancing the books arbitrarily, and at all costs, we would focus on the investments needed to grow the economy," he said, referring to the Liberal plan to run deficits in order to invest billions in areas such as infrastructure.
"We're always going to be fiscally responsible in the decisions we make."