Ottawa\u0027s inconsistent commitment to fiscal prudence is beginning to trouble some members of the Liberal family. Read more.
“We can’t deal with all of those without having some restraint in some places,” Morneau said at an event at Toronto Metropolitan University on Jan. 24. “We need to have targets of what we want to do fiscally, we need to decide places where we’re going to play in, places where we’re not going to play.”If Morneau was a lone voice, he might be easy for Prime Minister Justin Trudeau to dismiss. Morneau is promoting a book that is critical of his former boss, and heBut Morneau has backup.
Dodge, who was deputy finance minister when Jean Chrétien’s Liberal government ended a generation of budget deficits in the mid-1990s, released a report that concluded that Ottawa’s fiscal balance wasover the next decade, as both debt as percentage of GDP and interest charges as a percentage of revenue were on track to reach dangerous levels.
“Clearly, the ballooned levels of debt and deficits in 2021-22 that resulted mainly from spending increases in 2020 are unlikely to be sustainable,” Dodge, now senior advisor for law firm Bennett Jones LLP, wrote in the report. “Action to restore a sustainable balance between revenue and expenditure was, and continues to be, required.”
While Dodge sees the debt-to-GDP ratio reaching pre-COVID levels in his base case scenario, he and his team pointed to risks like increased fiscal spending, a recession, continued supply constraints — or a combination of all of these risks. Dodge authored the report alongside fellow Bennett Jones adviser Richard Dion. They collaborated with Robert Asselin of the Business Council of Canada, who used to advise Morneau.
While Wilkins held an optimistic view of the overall fiscal plan, she emphasized that government spending plays an important roll in stabilizing
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