OTTAWA – The Liberals say the latest figures from the Finance Department — which show a small deficit in the last fiscal year — confirm that the Tories left the books in the red when they lost the election last fall.
However, the Conservatives place blame for the deficit squarely on the Liberals — continuing a war of words over the state of the government’s finances.
The Finance Department said Friday there was a $2-billion deficit for fiscal 2015-16, based on preliminary estimates. The result comes before any year-end adjustments as well as a $3.7-billion commitment to benefits for veterans.
Final figures are expected to be released in the fall, but the Finance Department said the overall outcome was “broadly in line” with the $5.4-billion deficit for 2015-16 that was projected in the spring budget.
“The Conservatives have always talked a big game when it comes to balancing the budget, but their legacy amounts to them leaving behind tens of billions in additional debt with little more than a slowing economy to show for it,” said Daniel Lauzon, a spokesman for Finance Minister Bill Morneau.
Conservative finance critic Lisa Raitt swiftly pointed a finger at the Liberals.
“They made significant moves, they made changes to the Income Tax Act which has affected revenues, they have made changes in terms of departmental spending, that is completely within their control,” said Raitt, who was in Vancouver to attend her party’s convention.
In Winnipeg for the Liberal convention, Morneau allowed that moves the Liberals made in the last fiscal year contributed to the deficit. But he added: “When we take out the measures that we’ve put in, we’re still in a deficit position. So it’s quite clear that we were starting off with a deficit.”
The competing views reignited a long-running — and often heated — debate about whether the Conservatives left the Canadian fiscal house in order, a point of pride for a party that preached the virtues of balanced books.
There is enough ambiguity in the figures for each party to make an argument in its favour, said Craig Alexander, vice-president of economic analysis at the C.D. Howe Institute.
“It’s very difficult to break down the numbers and know to what extent would the budgetary numbers come in differently under a Conservative government than under the Liberal government,” Alexander said Friday.
“You can’t parse the numbers and have a definitive answer to that.”
In the end, the answer is not very important to the average Canadian anyway, Alexander said.
“It really is a political spat,” he said. “If there was a deficit, it wasn’t of a meaningful size. So from a purely economic point of view, it really doesn’t matter. And it’s now in the rearview mirror, and the Liberal government has told us that they will be running deficits for the next several years.”
Morneau said the Liberal goal is to make investments that boost economic growth.
In their spring budget, the Liberals announced plans for a $29.4-billion deficit for the 2016-17 fiscal year with billions being spent to help boost economic growth.
For March, the government posted a $9.4-billion deficit compared with a deficit of $3 billion in the same month last year.
The shortfall came as revenue fell $5 billion to $24.1 billion. Personal income-tax revenue fell by $1.1 billion or 9.4 per cent and corporate income-tax revenue fell by $2.1 billion or 37.3 per cent. Excise taxes and duties gained $500 million or 15 per cent.
Program spending increased by $1.3 billion to $31.5 billion, while public debt charges increased $100 million.
For the full year, government revenue totalled $289.6 billion, up $10.6 billion from a year ago, while program spending was $266 billion, up $16.6 billion.
Public debt charges for the year were down $1.1 billion at $25.5 billion.
— With files from Stephanie Levitz in Vancouver and Joan Bryden in Winnipeg