In just seven weeks, the Trudeau government has spent more money then it did in the Second World War, says new data. Yesterday, the Parliamentary Budget Office said the heavy increase in spending is due to pandemic relief programs
Liberal MP Sean Fraser, parliamentary secretary for finance said, “Yes we can afford this” when speaking with the Commons finance committee.
“We cannot afford not to. There is a cost to everything including inaction.”
In the report, Scenario Analysis Update by The Budget Office, this year’s deficit is $252 billion—almost five times as much as the previous record of $55.6 billion in 2010, according to Blacklock’s.
The Budget Office estimates a collapse of 18 percent in tax revenues and an economic production loss of 12 percent this year, making it the largest crash since 1932.
Prime Minister Justin Trudeau said to reporters that he is confident “our economy will come roaring back” after the pandemic.
When asked when Ottawa will reach the limit of what it can afford, Trudeau responded, “Right now we are focused on supporting families through this crisis. We need Canadians to stay home.”
The Budget Office noted that pandemic relief costs were a large part of the deficit. The Canada Emergency Response Benefit for workers out of the job was budgeted at $24 billion but analysts say that the net costs will hit $35.5 billion.
The Canada Emergency Wage Subsidy which gives employers up to $10,164 per worker had a budget of $73 billion. The Scenario Analysis said that those costs will hit $76 billion.
According to Public Accounts, Parliament had spent $15.3 billion on the Second World War by 1946. The modern equivalent to this is about $222.7 billion. The new deficit of $252.1 billion amounts to about seventeen times the First World War’s federal cost—adjusting for inflation.
“Despite recently announced measures, additional fiscal measures may be required to support the economy in the coming months,” said the Budget Office. “Moreover, after support measures are provided, fiscal stimulus measures may be required to ensure the economy reaches lift-off speed especially if consumer and business behaviour does not quickly revert back to ‘normal’ conditions.”
“The scenario under consideration is but one of many possible outcomes,” analysts wrote. “We stress this scenario is not a forecast of the most likely outcome. It is an illustrative scenario of one possible outcome.”