Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Minister of Finance Bill Morneau stands during question period in the House of Commons on Parliament Hill in Ottawa on April 23, 2018.

Sean Kilpatrick/The Canadian Press

Finance Minister Bill Morneau is underestimating the cost of some of his new budget measures and is facing larger deficits than promised, says a report from Parliamentary Budget Officer Jean-Denis Fréchette.

The PBO released an analysis of 10 items in Mr. Morneau’s February federal budget and concluded that their combined cost to the federal treasury will be $1.4-billion – or 7-per-cent – higher over five years than what the government had forecast.

The 10 items reviewed by the PBO include budget changes to Employment Insurance parental benefits, tobacco and cannabis taxation rules, interprovincial trade changes and incentive programs for corporations.

Story continues below advertisement

The report also states that the federal plan to impose a $50 a tonne levy on carbon emissions by 2022 could shave 0.5 per cent from economic growth. The report notes that if provinces and territories were to use carbon-levy revenues to lower taxes, the economic impact would be “significantly lower.”

The PBO’s economic and fiscal outlook report aims to provide an independent second opinion for MPs to consider as they assess the government’s financial projections.

Monday’s PBO report estimates that the deficit for 2017-18 will come in at $18.8-billion, representing a slight improvement over the $19.4-billion estimate in the budget. However, the PBO expects the 2018-19 deficit will be $4-billion larger than the $18.1-billion estimate in the budget and the 2019-20 budget will be $3.9-billion larger than the government’s $17.5-billion projection.

The annual differences from this year onward are even larger when considering the fact that the government’s numbers include a $3-billion adjustment for forecasting risk and unforeseen events, while the PBO’s numbers do not.

The PBO’s numbers for the 2020-21 to 2022-23 period are largely in line with the government’s estimates. According to the PBO, its main reason for projecting larger deficits over the coming years is higher assumptions for costs related to public debt, direct program expenses and children’s benefits.

While the PBO projects higher deficits, it notes that Ottawa is still on track to lower the size of the federal debt when measured as a percentage of economic growth.

The Liberal government pledge to reduce the federal debt-to-GDP ratio is Mr. Morneau’s preferred measure of Ottawa’s fiscal health. A Liberal Party campaign pledge to erase the deficit by 2019 has been abandoned and the government has not announced a new target date for returning to balance.

Story continues below advertisement

Chloé Luciani-Girouard, a spokeswoman for Mr. Morneau, responded to the PBO report by noting that projections over the future cost of government programs can vary because they are sensitive to the types of assumptions and projections that are used.

“I would point out that the PBO and our government both come to the same conclusion when it comes to our fiscal health, showing that the debt-to-GDP ratio – the size of the country’s debt relative to the strength of the overall economy − remains the best in the G7, and continues on a downward track,” she said in a statement.

Conservative finance critic Pierre Poilievre told reporters that the government should release its own internal estimates of how its carbon price plan will affect economic growth. He also said the government’s debt-servicing costs are increasing, which leads to real consequences for taxpayers.

“It means that more and more of our tax dollars will go to fund wealthy bond holders who lend money to the government and less and less of it will be available for vital services that Canadians rely upon,” he said. “In other words, we will be spending, under this government’s plan, more for nothing. More debt interest, higher taxes, a smaller GDP. That is the Liberal plan.”

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to
Comments are closed

We have closed comments on this story for legal reasons or for abuse. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies