'We are not out of this pandemic': Finance Minister
Finance Minister Bill Morneau announced Wednesday the federal government expects to run a budget deficit of $343.2 billion for the 2020-21 fiscal year due to massive spending in response to the COVID-19 pandemic.
That works out to nearly 16 per cent of the country’s economic output, a level not seen since World War II.
Direct support to households and businesses will cost a total of $212 billion this year, the government forecast. That includes $80 billion for the Canada Emergency Response Benefit (CERB) program and $82.3 billion for the wage subsidy program.
The government also sees its debt rising to 49.1 per cent of GDP this fiscal year, up from 31.1 per cent last year.
Below, experts react to the ballooning deficit forecast and weigh in on the path forward for climbing out of the hole.
Yves Giroux, parliamentary budget officer
“Wow, that’s huge. That’s eye watering, as I’ve said before when I was referring to a potential deficit of $250 or $260 billion. So it’s even worse than I and my team expected. So it’s staggering numbers and it’s also worrying to a certain extent because … at least for now, there’s no plan as to how we’ll get back to more normal levels of deficit.”
Jack Mintz, president’s fellow at the University of Calgary’s School of Public Policy and chair, Alberta Premier's Economic Recovery Council
“This is huge. No question about it. It’s gargantuan. …This is just a start. Next year, there’s going to be another big deficit. I will guarantee it. And so we are not at the maximum here.”
Perrin Beatty, president and CEO, Canadian Chamber of Commerce
“The scary thing is the path forward at this point is debt. The deficit figure is even worse than the most pessimistic projections have been. We all knew that the economy has been put into a medically-induced coma. We all knew that when we woke up it would be with a fiscal headache, but this is the mother of all migraines here. And it means then that the government needs to move to a growth agenda, focus on the private sector. We have to have a strategy to reopen the economy safely, one that’s tailored and manages risk. And we have to have time tables in there so people can plan.”
Kevin Page, president and CEO, Institute of Fiscal Studies and Democracy and former parliamentary budget officer
“That’s an enormous deficit … hopefully it can come in less than that. Talking about deficits in the 15-to-16-per-cent range, talking about debt upwards of 50 per cent federally, it’s a bit of a shocker in the context of no forward-looking plan.”
Bill Robson, president and CEO, C.D. Howe Institute
“I’m a bit alarmed by what we just saw, not just because of the size of the numbers, awful though they are, but also because of this apparent lack of concern and no strong signal — or even a weak signal — that they’re planning to change direction.”
Dennis Mitchell, CEO and CIO, Starlight Capital
"At the end of the day you have to look at the percentage of good that is done and the fact that we are emerging from this probably in better shape than a lot of countries, even if they didn't spend as much money as us."
Dan Kelly, president and CEO, Canadian Federation of Independent Business
“The government didn’t even announce the details of the expansion of the wage subsidy … and the employers do not have a single idea as to who’s going to qualify and who won’t. That, to me, is just a big, big missed opportunity to give some assurance to the business community. Gosh, the cheapest stimulus is some information about how these programs are going to operate.”