Jack Mintz: Freeland’s sudden conversion to fiscal sanity is too little, too late

financialpost.com:

In her letter of resignation, Chrystia Freeland criticized Prime Minister Justin Trudeau in pushing for gimmicky tax holidays and one-time rebates rather keeping the government’s fiscal powder dry in case Canada faces aggressive Trump tariffs. She is absolutely right, of course. Bad things can happen — like the COVID pandemic — that ratchet up debt burdens and interest costs and eventually impair growth by raising interest rates or taxes.

However, she has discovered religion too little, too late. Her recent fiscal plans are loaded with new spending, whether needed or not. This past year’s deficit was widely off the mark raising serious issues about Finance Canada’s ability to project deficits.

To begin with, it is shocking that the final deficit figure for the 2023/24 fiscal year has come in at $61.9 billion, almost $22-billion higher than the projected deficit of $40 billion in Budget 2024.

That budget was delivered on April 16, 2024, after the fiscal year ended on March 31. So how could a budget deficit end up 50-per-cent higher after the year was completed?

The answer given: the federal government “prudently” booked $16.4 billion in Indigenous contingent liabilities and $4.7 billion in COVID-related costs to 2023/24 fiscal year.

This raises serious questions about deficit reporting. Since these items were not mentioned in the 2024 budget, the minister last year boasted that she met her promised $40-billion fiscal guardrail. Now, we find out this year she did not. Eight months later, a much higher deficit number is announced simply by playing around with the books.

Given this experience, why should we believe any deficit projection? A deficit of $48.3 billion is projected for this fiscal year, ending March 31, 2025.