Ottawa posts deficit in October

That figure for the April-to-October period is a swing from the $600 million surplus the Finance Department reported during the same stretch in the 2015-16 fiscal year.

The numbers are not surprising given the Liberals have promised to run deep deficits over the coming years to finance major infrastructure work and more lucrative child benefits to help boost economic growth.

The Finance Department’s updated long-term outlook for the economy suggests that if things hold, the federal debt-to-GDP ratio will decline in the coming years even as Canada’s aging population puts a damper on economic growth as baby boomers leave the workforce.

A spokesman for Finance Minister Bill Morneau said the report shows that Canada’s fiscal situation is sustainable over the long-term and could ultimately improve. Dan Lauzon said the numbers also reinforce the need for the government to make continued investments to help create jobs and economic growth.

“The situation is delicate, and there’s a fine balance. We need to make every dollar count. Whether in transit, in clean technologies, or in health care, we will continue to make the kinds of investments that make a positive difference in the lives of families, and we will do so prudently,” he said.

It was the first wave of baby boomers hitting the workforce in the 1960s that boosted the potential growth in the Canadian economy. As they now move into retirement, the government expects their departure to have the opposite effect on the country’s finances as “powerful, slow-moving global forces” dampen economic growth for the foreseeable future, the Finance Department says.

The update says the federal debt-to-GDP ratio will hover around its current levels of about 31% until the early 2030s when it is expected to decline, unless their are changes in expected government spending and growth rates: Higher than expected spending and lower than expected growth would make federal finances unsustainable, while the opposite scenario would see the ratio drop to zero years earlier.

The monthly check on government spending shows federal program expenses were up 8.2%, or $12 billion, between April and October compared to the same period last year, largely a result of jumps in major transfers to people — including child, senior and employment insurance benefits — and spending at departments like National Defence.

Public debt charges were down by about $100 million, or 3.1%, compared to October 2016 because of lower interest rates.

The fiscal monitor also shows that revenues rose by 11.3%, or $2.5 billion, compared to the same time last year, with more money coming in from personal income, corporate and excise taxes.

Personal income tax revenue rose by 7.6%, corporate tax revenue rose by 16% and GST revenues rose by $600 million.

Employment insurance premium revenues were up as well by $18 million, or 1.5%, from the period last year.