Ottawa's annual spending breaches $300 billion for first time, pushing up Canada's debt ratio OTTAWA â€" Federal spending conti...
OTTAWA â€" Federal spending continued to rise over the last fiscal year, ballooning to over $300 billion for the first time and pushing up Ottawa’s net debt-to-GDP ratio, long touted by the Liberals as evidence of their controlled spending habits.
Spending in the fiscal year reached $332 billion, largely due to a recent accounting change that categorizes certain debt liabilities as program expenses. That compares to $287 billion in spending in 2016-17, which Finance estimates would have equalled roughly $312 billion under the current accounting rules.
The federal debt-to-GDP ratio now stands at 31.3%, up from the 30.4% projection in the 2018 budget
Spending also rose due to higher program expenses, including for national defence, various Crown corporation expenses and other government costs, according to Ottawa’s ann ual financial report released Friday.
Higher spending raised Canada’s net debt-to-GDP ratio, a key fiscal anchor that Finance Minister Bill Morneau has repeatedly cited as proof that Ottawa’s balance sheet remains healthy.
The federal debt-to-GDP ratio now stands at 31.3 per cent, up from the 30.4 per cent projection in the 2018 budget. That rise is also largely attributable to the accounting practice change, but Finance officials on Friday said the current ratio is still slightly higher than projections made under the new accounting rules.
Ottawa added around $20 billion to the national debt
Ottawa also added around $20 billion to the national debt in the 2017-18 fiscal year. As of March 31, Canada’s net debt now stands at $758 billion, up from $734 billion in 2016-17.
The rising debt-to-GDP ratios come even as personal income tax revenues increased over the year, and amid a strong Canadian economy. Bank analysts and othe r experts have said Ottawa should instead lower its spending amid a tight labour market and robust economy, keeping more cash in hand should the global economy flounder.
Prime Minister Justin Trudeau had initially promised to return to surplus in the years following his election win, after running an initial deficit of $10 billion. The deficit is now just under $20 billion, with Ottawa abandoning its plan to balance the books before the election.
Canada’s net debt-to-GDP ratio still remains among the lowest and healthiest of any developed nation. In the U.K., for example, the ratio is around 70 per cent.
The annual deficit came in at $19 billion, virtually unchanged from the year prior
Personal income tax revenues grew by $9.9 billion, or 6.9 per cent, a rise that came in part due to controversial tax changes introduced by the Liberal government last summer.
The changes included a higher tax rate on “passive†investment ho ldings above a certain threshold. That prompted many high-wealth individuals to defer their earnings and skirt the higher rates in 2016-17, blowing a hole in government revenues last year.
However, Finance officials said the rise in personal income tax revenues suggested Ottawa has now recouped some of this initial losses.
The annual deficit came in at $19 billion, virtually unchanged from the year prior.
Source: Google News Canada | Netizen 24 Canada
