Finance Minister Chrystia Freeland’s long term deficit reduction plan is not believable, the Parliamentary Budget Office said yesterday..According to Blacklock's Reporter, Freeland in her April 7 budget predicted the federal deficit will fall from $113.8 billion to $8.4 billion by 2027, a 93% decline..“I personally don’t believe it’s credible that there will be that level of spending restraint in the period from 2024 to 2027, given all the expenditures that remain to be implemented by the government over that period of time,” Budget Officer Yves Giroux testified at the Senate national finance committee..“Are these planned savings in this time frame still feasible?” asked Senator Peter Boehm (Ont.). “If we were to believe the government’s numbers that would mean between 2024 to 2027 operating and capital spending would grow by 0.3% per year,” replied Giroux..“It is a level of growth we have not seen in a long, long time,” said Giroux. The reductions would require an austerity plan eclipsing budget cuts that followed the 2008 financial panic, he said..“That would probably be fiscal tightening or expenditure restraint more severe than what we had seen under the Conservative years in the early 2000s, 2010,” said Giroux. “That’s one point. Also that is not taking into account government priorities announced in the electoral platform last year.”.Costs of campaign promises are “probably amounting to a couple of dozen billion dollars,” said Giroux. “There is a tremendous amount of spending pressures the government is faced with,” he added..“What is your main concern on upside risk?” asked Senator Tony Loffreda (Que.). “One element is the increase in interest rates which will very likely result in debt servicing costs that are higher than what the government is predicting,” replied Giroux..Parliament on May 6, 2021 voted to raise the federal debt ceiling 56%, from $1.168 trillion to $1.831 trillion. Interest payments on bonded debt totaled $20.4 billion last year. They are projected to rise to $42.9 billion by 2027..“The demands on the public purse are numerous and they account for significant amounts of money which are not factored into the budget that was tabled in April,” testified Giroux. The Budget Officer cited by example a cabinet pledge to increase military spending that totaled $23.6 billion last year..Finance Minister Freeland had promised to cut spending as the economy improved. “The government remains committed to unwinding COVID-19 related deficits,” Freeland wrote in a Fiscal Update last December 14.
