PBO says Liberals will not balance the budget in 2027

While Ottawa projects a $4.5 billion surplus in 2027, the new PBO report expects an $8.7 billion deficit instead.

PBO says Liberals will not balance the budget in 2027
The Canadian Press / Rich Lam
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Prime Minister Justin Trudeau is facing calls to rein in spending following a March Parliamentary Budget Officer (PBO) report showing significant deficits for years to come.

"The Trudeau government told Canadians to expect a balanced budget in 2027, but the PBO expects an $8.7 billion deficit that year," said Franco Terrazzano, Federal Director of the Canadian Taxpayers Federation (CTF). "Big deficits mean more debt on the backs of young Canadians, more money wasted on interest charges and less room to provide needed tax relief."

The PBO released its Economic and Fiscal Outlook report on Thursday, showing the deficit will increase to $43 billion in 2023. 

In the mid-year fiscal update, PBO numbers projected 2027 revenues to be $11.1 billion lower and interest charges $2.8 billion higher than the fiscal update.

"That means a $9.4 billion deficit in 2027," said Terrazzano.

The federal government projected a $4.5 billion surplus that year, but the PBO report projects an $8.7 billion deficit in 2027 instead — larger than the update's worst-case $8.3 billion deficit.

Additionally, the fiscal update showed the federal government spent $20.2 billion over budget this fiscal year. Budget 2022 released in April projected spending to be $452.3 billion for the year, while the update projected $472.5 billion in spending.

The PBO projects annual debt interest charges to climb from $34.7 billion in 2022 to $46 billion in 2027, with the debt expected to reach $1.2 trillion in 2023.  

"The feds claim fiscal prudence, but the PBO shows the deficit will increase in 2023," said Terrazzano. "Taxpayers deserve true fiscal responsibility, which means putting down the credit card and picking up the scissors."

Statistics Canada reported Tuesday that Canada's economy failed to grow in the last quarter of 2022 and shrank in December by 0.1%.

The three-month slowdown ended five consecutive quarters of growth, caused by less spending by businesses and households.

Business spending on machinery and equipment fell by 7.8%, while household investment fell by 2.3% in the quarter — marking consecutive declines for both.

Capital Economics economist Stephen Brown said the "stagnation" in Canada's economic output to finish off 2022 "leaves the economy in worse shape than the Bank of Canada expected."

The Bank of Canada said 2023 would feel bad for taxpayers in January.

"That is an economy that is stalled. It is not going to feel good. That is no growth," said Bank of Canada Governor Tiff Macklem. "The economy is slowing, and we expect it to continue." 

"We expect growth through the next two, three quarters to be close to zero."

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