Finance Minister Bill Morneau announced Wednesday a deficit of $343 billion this fiscal year – taking Canada’s debt to more than $1.2 trillion..In a what he called a “fiscal snapshot”, Morneau said spending from the COVID-19 outbreak was to blame for the massive deficit..The projected debt will be $1.2 trillion by March 2021, up from $765 billion a year earlier..Before the pandemic hit, the federal deficit was pegged about $34.4 billion..“Some will criticize us on the cost of action,” Morneau said in the House of Commons. .“But our government knew that the cost of inaction would’ve been far greater..“Those who would have us do less ignore that, without government action, millions of jobs would have been lost, putting the burden of debt onto families and jeopardizing Canada’s resilience.”.Much of the higher deficit comes from higher than projected spending under Ottawa’s two key COVID-19 financial aid programs, the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Response Benefit (CERB).The snapshot shows that GDP will shrink by projected 6.8% this year — worst since the Great Depression. But the economy is expected to bounce back by 5.5% next year..One of the reason the deficit is so much higher is the government predicting the amount of money it takes in will drop substantially.. Defying crackdown, hundreds march against lockdowns in Calgary .Personal income taxes are projected to dip by 30 per cent and corporate taxes will be 11 per cent lower..The national unemployment rate hit almost 14 per cent in the second quarter of 2020 but is expected that rate to return to levels closer to the pre-pandemic era — roughly 7 per cent — by the end of 2021..“The reality is we’ve witnessed an unprecedented shock to our system,” Morneau told reporters..“With a crisis of this magnitude, someone was going to have to shoulder the costs and the federal government was uniquely placed to take this responsibility on. We took on this role because it was the right thing to do.”.Tory leader Andrew Scheer called Morneau’s fiscal update a “dire picture of Canada’s finances.”.“The prime minister’s track record proves that he cannot be trusted to lead Canada through the recovery,” he said..Scheer said Canada is the only G7 country that has had its credit rating cut during the pandemic and Canada has the highest unemployment rate among the group of developed nations..“That should be a real wake-up call for this government.”.Canadian Taxpayers Federation Federal Director Aaron Wudrick said the news should alarm Ottawa..“Unfortunately, Ottawa doesn’t seem to have a plan to manage this deep dive into debt. For all the specifics he provided today, Finance Minister Bill Morneau may as well have posted a picture on Instagram,” Wudrick said..“Pandemic-related spending has caused the deficit to balloon by more than one thousand per cent in just four months. Much of this spending was intended to temporarily address the COVID-19 crisis, but these programs are extremely expensive and unsustainable. Minister Morneau needs to lay out a plan to turn off the taps, but he failed to do that..“In particular, it is clear that the government must either end or significantly reform the Canada Emergency Response Benefit which creates a strong unintended incentive for people to stay out of the workforce. .Dave Naylor is the News Editor of the Western Standard.dnaylor@westernstandardonline.com.TWITTER: Twitter.com/nobby7694
