Prime Minister Justin Trudeau’s government will release a fiscal update on Dec. 14 that should reveal a better-than-expected picture of Canada’s finances.

Trudeau’s deputy, Finance Minister Chrystia Freeland, announced the date in parliament Thursday. “We know it’s important to Canadians that we are careful and transparent with our nation’s finances,” she said.

Justin Trudeau elbow bumps Chrystia Freeland during an Ottawa news conference on Oct. 21.

The current inflationary environment -- while bad for consumers and workers -- is having some short-term benefits for government finances, with rising prices for things like oil fueling gains in corporate profits and tax revenue. 

As a result, national income is on track to be about $80 billion (US$62.4 billion) on average more annually over the next three years than projected in the government’s April budget, which means just over $10 billion per year in additional revenue for the government. 

It’s completely a price effect. Factoring out inflation, things look less rosy for the economy, with real production actually growing more slowly than the government predicted in April.

The additional revenue cushion, however, is already allocated to new spending. During the campaign for the Sept. 20 election, Trudeau’s government pledged an additional $78 billion in new expenditures over five years that will leave the fiscal track little changed, despite the higher revenue.

There will also be growing pressure on the government to take some steps to help people deal with the higher inflation. Quebec’s provincial government, as part of its fiscal update last month, announced a one-time payment of $275 for individual low-income earners, or $400 for couples, to help face the rising cost of living, along with increased aid to the elderly and a bigger tax credit for childcare expenses.  

In her April budget, Freeland projected a deficit of $155 billion in the fiscal year that began April 1, or 6.4 per cent of GDP, before narrowing further to about $60 billion in the next. The shortfall peaked at $354 billion last year, or 16.1 per cent of GDP. 

The deficit projections in the Liberal Party’s election platform that accounted for the additional spending were of similar magnitudes. The Liberals are also promising new revenue-generating measures totaling about $25 billion over five years.