Here is more analysis and commentary of the fiscal and economic cycle for Canada.

1. What is going on with
the Fiscal Management
Cycle for Canada –
Paul Young CPA CGA
July 7, 2020

2. Paul Young - Bio
• CPA, CGA
• Academia (PF1, FA4 and MS2)
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Emerging Technology
• SME – Financial Solutions
• SME – Business Process Change
• SME – Supply Chain Management
Contact information:
Paul_Young_CGA@Hotmail.com

3. Introduction
This presentation looks at key planks by
the Liberals as well as fiscal
management cycle for each party.
Federal government has undertaken
$342B+ in deficit spending as part of the
COVID19 response.

4. Agenda
• FY 19/20 – Fiscal Management Cycle – Canada
• FY 20/21 – Fiscal Management – Federal
Government
• FY 20/21 – Fiscal Management Cycle –
Provinces
• Credit Downgrade
• Debt to GDP
• Blog – Deficit
• GDP Growth / Provinces
• Job Quality – USA vs Canada
• GDP Issues
• Key Metrics / GDP comments
• Importance of Audit (Operational and
Performance Audit)
• PBO / Deficit
• Paul Martin years
• Failure of Trudeaunomics
• Summary

5. Federal Government FY
19/20
Source - BMO

6. 20/21 – FY – Federal Govt
Source – BMO - https://economics.bmo.com/en/publications/detail/2a38b360-554f-462c-bf26-62300c6ce3c7/

7. 20/21 – FY – Federal Govt
Source – BMO - https://economics.bmo.com/en/publications/detail/2a38b360-554f-462c-bf26-62300c6ce3c7/

8. 20/21 – FY – Federal Govt
Source – BMO - https://economics.bmo.com/en/publications/detail/2a38b360-554f-462c-bf26-62300c6ce3c7/

9. Change in Debt to GDP

10. Debt to GDP / G7
Source – Scotiabank

11. Global Debt
Source – RBC

12. Total Govt Debt to GDP
Source - https://data.oecd.org/gga/general-government-debt.htm
• United Kingdom and Germany have lower total Govt Debt to GDP.
• Canada is approaching Spain in terms of debt levels -
https://www.reuters.com/article/spain-economy-debt/spanish-public-debt-rises-to-record-
high-in-april-bank-of-spain-says-idUSL8N2DU54T

13. Blog – Deficit and Debt
The economy and fiscal cycle were both a mess way before
COVID19. @JustinTrudeau kept saying the economy will
grow from the heart. @Bill_Morneau said Canada has a
solid B/S and then Canada's debt was downgraded.
Trudeau turned $1B surplus YTD/Nov 15 to large deficits
within five years. The economy was also doing poorly before
COVID19 -
https://www.slideshare.net/paulyoungcga/canada-fiscal-
management-debt-and-deficit
Household debt is still a big issue with Canada and other
Countries - https://www.cbc.ca/news/business/statistics-
canada-debt-1.5609510
Debt issues are a big issue. Interest rates will rise, but the
bigger issue is shrinking business and/or job quality issues
Source - https://www.slideshare.net/paulyoungcga/debt-
consumer-government-and-corporate-debt-crisis

14. Downgradi
ng of Debt
Source -
https://economics.bmo.com/
en/publications/detail/5f3625
7b-4df7-443b-b5d2-
c348e290327c/
Fitch Rating
itch Ratings - New York - 24 Jun 2020: Fitch Ratings has downgraded Canada's Long-Term Foreign Currency Issuer Default Rating
(IDR) to 'AA+' from 'AAA'. The Rating Outlook is Stable.
KEY RATING DRIVERS
The rating downgrade reflects the deterioration of Canada's public finances in 2020 resulting from the coronavirus pandemic.
Canada will run a much expanded general government deficit in 2020 and emerge from recession with much higher public debt
ratios. The higher deficit is largely driven by public spending to counteract a sharp fall in output as parts of the economy were
shuttered to contain the spread of the coronavirus. Although this will support recovery, the economy's investment and growth
prospects face challenges.
The Stable Outlook reflects Fitch's expectation that Canada's consolidated gross general government debt/GDP will stabilize
over the medium term, in line with the pre-coronavirus policies, and that the economy will gradually recover, supported by
significant counter-cyclical monetary and fiscal policies.
Canada's structural strengths also underpin the ratings. These include its advanced, well-diversified and high-income economy,
and Canada's political stability, strong governance and macro policy framework, which has delivered steady growth and low
inflation. Canada has a large positive net international investment position, driven by its foreign pension assets. However,
reliance on foreign portfolio flows to finance sustained current account deficits is a weakness, which has contributed to a
persistent and growing level of net external debt.
Source: https://www.fitchratings.com/research/sovereigns/fitch-downgrades-canada-ratings-to-aa-outlook-stable-24-06-2020
Summary
 Lower bond rating means higher interest rates as bond raters will demand a premium for Cdn bonds
 Trudeau was warned about the govt debt, but Morneau kept saying all was well -
https://www.slideshare.net/paulyoungcga/debt-and-insolvency-global-crisis
 Trudeau has failed the goods producing sector with his carbon tax, small business tax reforms, excessive regulations, weak
infrastructure spending, etc. - https://www.slideshare.net/paulyoungcga/what-is-going-on-with-canadas-competitiveness
 Natural Resources were struggling since late last years as Trudeau stood back when there was blockades and other issues.
https://www.slideshare.net/paulyoungcga/canada-natural-resources-sector-whats-next

15. GDP Growth / Provinces
Source – RBC Economics

16. Job Quality

17. GDP / Issues
• https://www.msn.com/en-ca/money/topstories/posthaste-how-to-pay-for-the-
ballooning-federal-debt-lower-income-taxes-%e2%80%94-but-raise-others/ar-
BB16u1DL?ocid=st2
• This is the @CDHoweInstitute which seem to think certain taxes are better than
others. The only way to resolve the deficit and debt is through prudent fiscal
management and focusing on expanding the economy!
• Here are the real issues
• https://twitter.com/AnnieClaireBO/status/1280885676217700359
• Deficit – https://www.slideshare.net/paulyoungcga/how-to-reform-local-and-
municipal-government or https://www.slideshare.net/paulyoungcga/canada-fiscal-
management-debt-and-deficit
• Scorecard - https://www.slideshare.net/paulyoungcga/policy-and-economic-analysis-
justin-trudeau-liberal-government-of-canada-april-2020-and-may-2020 or
https://www.slideshare.net/paulyoungcga/how-best-to-reshore-supply-chains
• Infrastructure - https://www.slideshare.net/paulyoungcga/canada-infrastructure-
analysis-of-policy

18. Unemployment Rates

19. GDP and restructuring
• Many of the economies continue to be impacted by COVID19 -
https://www.slideshare.net/paulyoungcga/scorecard-government-
and-economic-performance-november-2015-to-april-2020
• Post-COVID 19 economy should include a focus on supply
management - https://www.slideshare.net/paulyoungcga/how-best-
to-reshore-supply-chains
• Countries around the world are going need to push for trade reforms
including reforming of key groups like WHO and WTO -
https://www.slideshare.net/paulyoungcga/state-of-the-world-
economy-june-2020
• All levels of governments around the world will require a
restructuring - https://www.slideshare.net/paulyoungcga/canada-
municipal-and-local-government-whats-needs-to-be-done

20. Importance of Audits
• More oversight i.e. Infrastructure funding -
https://nationalpost.com/news/opposition-pushes-for-audit-of-
trudeaus-187b-infrastructure-plans-underscoring-weakened-
liberal-position-in-house or medical supplies -
https://thepostmillennial.com/trudeau-governments-medical-
equipment-blunder-cost-taxpayers-1-8-billion
• In times of fiscal crisis there is need for more oversight and audits
- https://ipolitics.ca/2020/05/12/auditor-general-says-lack-of-
funding-covid-19-demands-have-put-all-but-three-audits-on-
pause/
Source - https://www.slideshare.net/paulyoungcga/the-importance-
of-value-for-money-and-perfomance-based-audits

21. PBO / Deficit
• CERB / extension cost “Eight more weeks of CERB to cost $17.9 billion,
budget officer says” https://www.cbc.ca/news/politics/cerb-extension-pbo-
1.5623507
• Federal deficit will be much larger “The parliamentary budget officer says in a
new report that this year's federal deficit could hit $256 billion due to the
COVID-19 pandemic. The result, posted this morning, is the combination of
an estimated total of $169 billion in federal spending on emergency aid and a
historic drop in economic output. The budget office estimates the economy
could shrink by 6.8 per cent in 2020, the weakest showing since 1981 and
double the record of 3.2 per cent shrinkage in 1982. The overall deficit figure
is only $3.8 billion higher than budget officer Yves Giroux's previous
predictions, which his report says is due to a better economic outlook in the
second half of the year that offsets some new spending. ”
https://www.cbc.ca/news/politics/federal-deficit-pbo-1.5617221
• Government will require restructuring as part of post-covid19 -
https://www.slideshare.net/paulyoungcga/transforming-the-public-sector-
canada

22. Paul Martin years
• It never seems to amaze me how little people research history. It is like they
take scripts from Liberals sites as the only source of the truth. The problem is
Liberals like any other party will not tell you the complete truth,
• https://www.slideshare.net/paulyoungcga/2019-election-fiscal-management-
canada-june-2019 (see slide 26)
• Slashed transfers – Trudeau had no issues with slashing transfers under Paul
Martin - https://www.macleans.ca/news/canada/justin-trudeau-weighs-in-on-
paul-martins-decision-to-slash-provincial-transfers/. Harper did fiscal discipline
and Trudeau calls that out - https://www.liberal.ca/growing-our-economy-ralph-
goodale/. No were does Trudeau and his team mention how Harper left $1B
surplus YTD Nov/15 - https://www.slideshare.net/paulyoungcga/the-stephen-
harper-years-pm-of-canada
• Restructure EI including taking surpluses into operations -
https://www.cbc.ca/news/canada/government-broke-law-on-ei-financing-in-3-
years-top-court-1.750084

23. Failure of
Trudeaunomics
• The sad thing is the economy has been sliding for a few years due to Trudeaunomics being a failure!
• https://www.slideshare.net/paulyoungcga/failure-of-trudeaunomics
• Carbon tax and other changes have made things less affordable - https://www.slideshare.net/paulyoungcga/justin-trudeau-
and-liberals-have-liberal-policies-made-things-more-affordable-for-canadians
• GDP growth pre-COVID was running at 2.0% which is about the same rate as the past 20 years -
https://www.slideshare.net/paulyoungcga/canada-slow-growth-liberal-party-of-canada-december-7-2016
• Trudeau introduce policies that did little to get goods to market or support small business -
https://www.slideshare.net/paulyoungcga/canada-whats-next-for-small-business or
https://www.slideshare.net/paulyoungcga/canada-natural-resources-sector-whats-next
• There has been a job quality issues as Trudeau’s policies did little to support goods producing sector -
https://www.slideshare.net/paulyoungcga/job-quality-canada-235057299
• Trudeau continues to push guarantee income despite guarantee income being a failure around the world -
https://www.slideshare.net/paulyoungcga/is-guarantee-income-the-right-approach-for-canada-and-other-countries

24. Summary
• Canada will have a long road a
head when it comes to fixing its
economy and fiscal management
cycle by all levels of government
• Canada will need a plan that deals
with job quality, fdi, goods
producing sector, affordable
housing, tax fairness and value for
money social programs -
https://www.slideshare.net/paulyou
ngcga/transforming-the-economy-
postcovid19-canada-and-the-world

25. Other
Sources
• If you like to learn
more about trade
and/or other
subjects as part of
your professional
learning and
development then
feel free to review
my material on
https://www.udemy.
com/ (search Paul
Young CPA CGA