No balanced budget goal as Carney’s Liberals announce mega deficit

Both Mark Carney and Government House leader Steve MacKinnon have told Canadians to prepare for a hefty federal deficit in the upcoming budget but refused to provide an estimate on the shortfall.

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Both Prime Minister Mark Carney and Government House leader Steve MacKinnon have told Canadians to prepare for a hefty federal deficit in the upcoming budget but refused to provide an estimate on the shortfall.

MacKinnon asserted that the Liberal government, despite its consistent deficits, plans to tackle the budget while making substantial investments in housing, the military, and economic expansion.

At a Thursday morning press conference on Parliament Hill, MacKinnon repeatedly refused to put a figure on the shortfall or say when the budget will be tabled.

“I don’t want to characterize the deficit other than what I’ve already said. It’s substantial and needs to be dealt with and is being dealt with with incredible seriousness by the entire government,” he said.

He described some current challenges as “the unwinding of some of the measures that were proposed and accomplished during the pandemic,” while stressing the deficit would “not go back to a pandemic” level.

MacKinnon said Prime Minister Mark Carney has asked all ministers and departments to find savings and ensure government programs deliver results.

“Canadians expect their tax dollars to have maximum impact,” he said, adding that the Liberals’ goal is to “spend less and invest more” rather than impose deep cuts.

Carney previously confirmed during a Sunday press conference that the deficit in the upcoming budget would “be bigger than it was last year.”

He rejected suggestions the government is preparing an austerity plan, saying Canadians were given a clear picture of Ottawa’s finances during the election campaign and “certainly had the full financial picture for the previous fiscal year.”

Opposition MPs and reporters pressed MacKinnon on whether the government is quietly softening expectations after promising a balanced operating budget. He said the Liberals remain focused on “investing in people, investing in housing and investing in the economy,” and will “govern responsibly and work with politicians from all sides of the House.”

The government is expected to table its next budget this fall.

A July analysis done by the C.D. Howe Institute estimates the federal deficit could climb to more than $92 billion by 2025-26 which are far higher than Ottawa’s own projections.

The report warns that the Carney government’s election-platform spending commitments and higher defence outlays could push annual deficits to an average of roughly $78 billion over the next four years, with a cumulative total approaching $350 billion and Canada’s net debt rising to about 44 per cent of GDP.