Newspaper article The Canadian Press

Federal Deficits Won't Be as Deep as Liberals Predict: Budget Watchdog

Newspaper article The Canadian Press

Federal Deficits Won't Be as Deep as Liberals Predict: Budget Watchdog

Article excerpt

Federal deficits won't be as deep: PBO


OTTAWA - Canada's budget watchdog released fiscal predictions Tuesday that suggest the federal government has been overly prudent in its projections.

A new report by the parliamentary budget office said the federal books are on track to add a total of $90.8 billion to the public debt over the next half-decade -- lower than the federal government's projection of $113.2 billion over the same period.

The analysis also challenges the Liberal government's estimate of a shortfall for 2015-16, saying Ottawa will instead have a $700-million surplus in 2015-16, rather than the projected $5.4-billion deficit.

Critics say the Liberals have deliberately lowered their fiscal outlook by including larger-than-usual risk adjustments of $6 billion per year in order to help the government beat expectations down the road.

Earlier this month, the parliamentary budget office called the Liberals' adjustment "excessive" and said it eroded the independence of government's traditional practice of basing its projections on an average of private-sector economic forecasts.

On Tuesday, the PBO again questioned the need for the government to use such a big cushion in its predictions.

"PBO's forecast of the budgetary balance is $4.5 billion higher than budget 2016, on average, over the outlook," the document said.

"The average difference is roughly in line with the budget 2016 planning adjustment."

For example, the budget office is expecting Ottawa to show a $20.5-billion deficit this year, $8.9 billion smaller than the Liberal government's $29.4-billion prediction.

Conservative interim leader Rona Ambrose crowed about the report during question period, citing it as evidence that Liberal claims of an inherited Conservative deficit are little more than political fiction.

"Today, (the parliamentary budget officer) confirmed two more things: first, the Liberal budget does not add up, and second, good news -- Conservatives did leave a surplus," Ambrose said as the Tory benches hollered their approval.

Finance Minister Bill Morneau defended his budgetary prudence as a necessary hedge against forecasters, who have been known to be wrong in recent years. …

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