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Finance Minister Bill Morneau speaks at the Canadian Club and the Empire Club in Toronto on March 1, 2018.

Christopher Katsarov/THE CANADIAN PRESS

The federal government's own internal surveys found Canadians believe Ottawa is getting it "wrong" on deficits and spending, but that didn't stop the Liberals from releasing a third consecutive deficit budget with no timeline for balancing the books.

The Finance Department also tested Canadians' appetite for a national sugar tax, but the Liberal budget ultimately took a pass on the controversial proposal for tackling obesity.

The fact that Finance Minister Bill Morneau's Feb. 27 budget contained no timeline for returning to balanced budgets was one of the biggest sources of criticism the minister faced.

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Mr. Morneau's department hired Quorus Consulting Group to conduct a mix of focus groups and phone surveys over the summer and fall of 2017. A final report is dated Nov. 24, 2017, and it was recently made public under federal disclosure rules.

The 2018 budget focused on gender equality in the work force and increased funding for scientific research. It also devoted relatively small amounts of new spending to a large number of areas, including regional development, addressing opioid abuse and increased funding for Canada's spy agencies.

The budget projects an $18.1-billion deficit for 2018-19. The size of the deficit is projected to decline to $12.-3-billion in 2022-23. Each of the annual projected deficits during that five-year projection period represent less than 1 per cent of Canada's gross domestic product.

The size of the federal debt is projected to grow from $669.6-billion in 2018-19 to $730.1-billion in 2022-23. When measured as a percentage of GDP, the size of the debt would decline during that same five-year period, from 30.1 per cent to 28.4 per cent.

The scale of deficit spending is at odds with a key Liberal election promise. The Liberals' 2015 campaign platform pledged to keep annual deficits under $10-billion and to balance the books by 2019.

The government's new fiscal track is currently the subject of considerable debate among politicians and economists. While some economists say the size of the federal debt is far from being a concern, critics say the higher cost of financing that debt as interest rates rise leaves Ottawa with less money for other priorities, such as new spending or tax cuts.

Scotiabank economists Jean-François Perrault and Mary Webb, for instance, said in a post-budget note that it would have been "more prudent" to focus on lowering the deficit so that those savings are available in the event of an economic downturn.

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The chief executive of Canada's largest bank also took issue with the government's spending plans on Tuesday. Royal Bank of Canada CEO Dave McKay said he's concerned that government largesse, combined with high consumer spending among Canadians, "particularly on housing," is "overdriving the economy."

"We're running significant deficits in the country to continue to spur growth at a time when maybe we should be running a surplus given the economic strength out there," he said at a conference in New York.

The government's public opinion research suggests most Canadians share that view.

The polling report states that focus group participants "felt the government has been getting the following wrong" over the past year, listing "deficits and spending," followed by not doing enough for First Nations, abandoning electoral reform, legalizing marijuana and "taking care of who is crossing our border into Canada from the U.S."

In terms of what the government is getting right, participants praised Canada's direction and tone on the international stage, its focus on the environment and immigration issues.

The research included 10 small focus groups across the country in August with a total of 71 individuals. Focus groups are used to allow for more in-depth discussions, but their small sample size means the results should not be considered representative of a lager population.

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The report is also based on a telephone survey of 2,000 Canadians conducted between Sept. 6 and Oct. 1, 2017. A survey of that size has a margin of error of plus or minus 2.2 per cent, 19 times out of 20.

The phone survey found that more than six in 10 Canadians believe reducing the federal deficit should be a priority, but other issues presented to participants ranked higher. Creating jobs was the top priority, with 87-per-cent support, followed by increasing economic growth, making the richest Canadians pay their fair share in taxes and making the tax code fairer.

The survey breaks down the views of Canadians on the deficit, finding that Quebec residents are by far the least concerned by the federal deficit. Men are slightly more likely than women to list the deficit as a priority, while Canadians aged 55 and over are more likely than younger adults to support lowering the deficit.

A spokesperson for Mr. Morneau said Tuesday that the budget shows the government is investing in Canadians while maintaining a "strong fiscal framework."

The issue of taxing sugary drinks was raised during the focus groups, but not in the telephone survey. The report said "many were in favour of the tax."

Canada has faced pressure from the World Health Organization, the Heart and Stroke Foundation and Diabetes Canada to follow the lead of other countries – such as the United Kingdom – in adopting a sugar tax. The 2018 federal budget made no reference to a sugar tax.

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With files from James Bradshaw.

The Finance Minister was asked Thursday about legislation in the budget that would give foreign authorities some access to Canadians’ confidential information. Bill Morneau says the measure is aimed at cracking down on tax evasion. The Canadian Press
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