Prime Minister Justin Trudeau, who is signalling that the Liberals may be unable to meet a campaign pledge to balance Ottawa’s books by 2019, says the challenge is whether his government can spur sufficient economic growth to reverse damage caused by falling oil prices.
Mr. Trudeau was asked Thursday to clarify remarks he made to La Presse this week, when he said that returning to surplus in the near term could be hard.
He didn’t back away from the comments and instead reiterated that dropping crude prices are hurting Canada’s economic outlook.
“We’ve seen with falling oil prices that there is a trajectory that continues to look difficult for Canada,” the Prime Minister said Thursday during a news conference with UN Secretary-General Ban Ki-moon.
Mr. Trudeau and Finance Minister Bill Morneau have been clear that they feel that encouraging stronger economic growth is preferable to austerity as a way of balancing the books over the long term.
Leading economists likewise have urged the Liberal government to consider deficits even deeper than those it has already promised to further stimulate growth.
The Liberals pledged to run deficits no deeper than $10-billion annually over the next few years and balance the books by 2019.
As recently as December, the Prime Minister, when asked by The Canadian Press how cast in stone his budget-balancing pledge was, answered “very.”
Now, however, Mr. Trudeau is warning this may not be achievable.
“If we look at the growth projections for the next three or four years, it will be difficult [to return to balance],” he told La Presse this week. “But everything we’re doing is aimed at creating economic growth. When predicting the level of growth four years in advance, governments often miss the target.”
On Thursday, the Prime Minister said his entire economic plan is geared at “turning around the low growth rates Canada has been facing.”
He said he hopes his economic prescription works, from middle-class tax cuts to infrastructure spending.
“Our hope is that investing in infrastructure, in opportunities for the middle class and for those seeking to join the middle class, we will be able to turn around the low-growth trajectory and create the kind of growth that will benefit not just the government’s balance sheet but indeed the entire Canadian economy.
“We’re working very hard to do that,” Mr. Trudeau told reporters.
“We continue to recognize that the Canadian economy is facing real challenges in terms of growth, in terms of jobs for the middle class, for those seeking hard to join it, which is why we put forward an ambitious plan to invest in our communities, to lower taxes for the middle class and to put more money in the pockets of people who need it with the Canada child benefit for example.”Report Typo/Error