Federal finances swung from black to red in the final month of the fiscal year as Ottawa recorded a $14.9-billion deficit in March alone.
The Finance Department released its monthly tracking report of federal spending trends on Friday. Repeating a pattern that has long been criticized as March madness, the rush of year-end spending means the 2018-19 deficit is on track to come in around $11.8-billion. That would represent an improvement over the 2019 budget forecast of $14.9-billion.
While the March report covers the full fiscal year, the official year-end results will not be announced until the fall.
Last month’s report, which covered the first 11 months of the fiscal year, had showed that federal finances were in surplus heading into March.
The release of the deficit figures comes amid a changing political dynamic around deficit spending in the run-up to the 2019 federal election campaign. Throughout the Liberal government’s four-year term, the opposition Conservatives have regularly chastised the government for running larger deficits than promised and for failing to set a timeline for balancing the books.
However, Conservative Leader Andrew Scheer changed his party’s messaging last week by announcing in a speech that, if elected this fall, a Conservative government would improve the bottom line, but would not balance the books in its first term.
Finance Minister Bill Morneau’s March budget said the deficit for the 2019-20 fiscal year will be $19.8-billion and it did not include a target for eliminating the deficit. The Liberal Party had campaigned in 2015 on a pledge to run short-term deficits and to balance the books by 2019-20.
The government has faced criticism from Parliament’s spending watchdog for refusing to acknowledge that the promise will not be met. A federal government website that tracks key promises had been describing the pledge as one that was in progress, but “facing challenges.”
That website, which is run by the Privy Council Office, was recently updated to say the promised balanced budget “is not being pursued.”
In the House of Commons on Friday, Conservative Finance critic Pierre Poilievre said the fiscal monitor report shows Prime Minister Justin Trudeau will break his promise to balance the books and predicted the Liberals will eventually have to raise taxes to pay for higher federal spending.
Liberal MP Jennifer O’Connell, the parliamentary secretary to the Finance Minister, rejected that claim.
“The Conservatives constantly flip-flop on their policies and mislead Canadians in the House and in the public domain,” she said. “The reality is the fact that we lowered taxes on the middle class and raised them on the wealthiest one per cent.”
One of the Liberal Party’s line of attacks in recent weeks is that the Conservatives would impose deep spending cuts if elected in the fall.
After question period, Mr. Poilievre told The Globe that the monthly tracking data suggests the Liberals could have produced a smaller deficit, but chose to spend big at year end instead.
“The massive March madness splurge is consistent with Trudeau’s irresponsible spending,” he said.
“What’s strange about it from a political point of view is that the Liberals easily could have had a much smaller deficit, but they seem proactively to have shovelled money out the door to deliberately inflate the deficit numbers.”
Mr. Poilievre said Conservative supporters understand Mr. Scheer’s decision to revise his pledge to balance the books within two years.
“It is grudging acceptance by all Conservatives that the mess is bigger than we thought it would be two years ago,” he said. “It will take longer to clean up the Trudeau deficit.”
Friday’s report said federal revenues rose by 8.1 per cent during the 12-month period that ended March 31, while program spending rose 6.2 per cent. Public debt charges were 6.3 per cent higher than the previous year.