This presentation will discuss the deficit projections for the Government of Canada from 2016-2021. The focus will be on consumer spending, merchandise trade, infrastructure and government spending. The presentation will highlight election promises as well as what is happening both with Canadian and World economies.

1. Canada FiscalUpdate
2016
By: PaulYoung, CPA, CGA
November 5, 2016

2. Agenda
 What is Fiscal Update?
 Fiscal Update
 Liberal 2015 election plan to run modest deficits
 Media Comments
 Moodys

3. What is a fiscal
update
 It is a government statement/report that shows where the
government thinks they will end the year in terms of their budget
results

4. Fiscal update
Source – Scotiabank

5. Liberal
Election
Promise
 The Liberals say the deficits will be “modest, short-term” — less than $10 billion in each of the next two fiscal years. “We
are committed to balancing the budget in 2019,” Trudeau said. “We know the economy will improve when the Canadian
government starts investing once again in the kinds of things that will create growth.” And if the economy doesn’t
improve and the fiscal picture gets worse,Trudeau said his party would be “honest” with Canadians about the numbers.
Approaching the midpoint of this campaign, it seems Canada’s political universe has been knocked off kilter. It’s the
Liberals, fond of boasting about their party’s economic DNA and record of balanced budgets, who are now vowing big-
ticket infrastructure spending, even if means deficits.
Reality:
1. Slow growth has continued into 2016 and will for the near future
(http://www.gbm.scotiabank.com/English/bns_econ/forecast.pdf)
2. Impact of carbon pricing as well as hikes CPP have not impacted the economy
3. Part-time jobs have grown at faster pace that full-time jobs - http://www.theglobeandmail.com/report-on-
business/economy/canada-pumps-out-surprising-44000-jobs-in-october/article32673813/ or
http://www.slideshare.net/paulyoungcga/canada-employment-market-for-october-2016
4. Trade has struggle due to slow world-wide growth - http://www.slideshare.net/paulyoungcga/merchandise-trade-
canada-september-2016
5. Retail sales have been sluggish since February 2016.There is no indication that people have bump up retail sales due
to changes to taxation rates and/or the family tax benefit - http://www.slideshare.net/paulyoungcga/retail-sales-
canada-august-2016
6. Provincial policies like carbon taxation, hikes to PST and hydro rates have put a strain on household budgets
7. Money has been slowed to infrastructure - http://www.slideshare.net/paulyoungcga/government-policies-
infrastructure-canada
8. Ralph Goodale comment “As a consequence, Canadians are stuck with $158-billion in new Harper debt -- without
much to show for it.There are 160,000 more jobless Canadians today than before Mr. Harper took power. Job quality
is at a 25-year low. Household debt is near a record high. Canada's trade deficit this year has topped $13-billion.
Business and consumer confidence are down. And Mr. Harper has cemented his reputation for having the worst
economic growth record of any Prime Minister since R.B. Bennett in the 1930s. Source -
http://www.huffingtonpost.ca/ralph-goodale/mr-harpers-economic-recor_b_8020980.htmlYet the Liberals will add
$100B deficits to the debt from 2015-2019.
https://www.thestar.com/news/federal-election/2015/08/27/trudeau-says-liberals-would-
run-modest-deficits-to-kickstart-economy.html

6. Media
comments
 Bill Morneau has been finance minister for all of a year, but he’s learned pretty quickly
to deal with economic disappointment. Over the course of a single budget and two
fiscal updates,Canada’s Liberal government has witnessed firsthand the fiscal fallout
that attends subpar growth and lukewarm inflation. Although hardly unique to
Canada’s sovereign, a lower and flatter trajectory for nominal GDP has robbed the
government of hoped-for revenue. Importantly, the sizeable amount of prudence set
aside in budget 2016 (fully $6-billion per year) has been called on to blunt the impact on
the budget balance.” Warren Lovely, National BankSource -
http://www.theglobeandmail.com/news/national/how-ottawa-is-at-the-mercy-of-the-
economy/article32674481/
 Fact
 Liberals knew that Canada was headed for slow growth. Liberals felt Keynesian economics
was the way to go in terms of spending.The problem is spending has not been effective in
areas like Retail Sales - http://www.slideshare.net/paulyoungcga/retail-sales-canada-august-
2016
 The government also has not expedited the time to get pat expand the projects off the
ground as such this will impact exports down the road when the commodity market
rebounds. http://www.gbm.scotiabank.com/English/bns_econ/bnscomod.pdf
 Employment has also been a problem as the bulk of the jobs created have been part-time
jobs - http://www.slideshare.net/paulyoungcga/canada-employment-market-for-october-
2016
 Liberals did not also take into consideration the high hydro rates. Ontario has some of the
highest hydro rates in North America - http://news.nationalpost.com/news/canada/portrait-
of-five-ontario-hydro-bills-how-a-rural-couple-pays-500-a-month-and-toronto-brothers-
pay-100
 Liberal plan to force carbon pricing will not grow the economy.
http://thetyee.ca/Opinion/2016/03/08/BC-Carbon-Tax-Failure/
 There is a big push for more protectionism policies - https://www.ft.com/content/2dd0ecc4-
3768-11e6-a780-b48ed7b6126f. Canada depends on exports -
http://www.slideshare.net/paulyoungcga/merchandise-trade-canada-september-2016

7. Media
Comments
 Quotes “JustinTrudeau‘s Liberal government laid out a plan
Tuesday for boosting infrastructure spending and encouraging
private investment in the projects. But missing from the fall
economic update tabledTuesday in the House of Commons was a
road map back to balanced books — or any indication when that
could happen.The Liberals have, once again, downgraded their
economic outlook, projecting deeper deficits than announced
either during the 2015 election campaign or in the 2016 federal
budget.
 Source - http://globalnews.ca/news/3038932/finance-minister-bill-
morneau-releases-economic-outlook/

8. Moodys
 Key quotes “Moody's Investors Service ("Moody's") has today affirmed Canada's Aaa
government issuer ratings, the Aaa senior unsecured rating, the (P)Aaa senior unsecured MTN
and shelf ratings, and the (P)P-1 short-term rating.The stable outlook is maintained.
 The main factors supporting the rating affirmation are:
 1. Canada's flexible and competitive economy, supported by exceptionally strong institutions
and economic policy management, which underpins its capacity to absorb negative economic
shocks and bolsters its robust growth potential
 2. Moody's expectation that government debt ratios, including a low federal debt burden, will
remain stable in the next two years and decline gradually in subsequent years, alongside the
demand for Canadian assets from long-term investors which we expect to continue to foster
stable financing conditions
 3. Strong institutions that underpin a well regulated financial system that would absorb a
potential housing shock with minimal fiscal costs for the government
 The ongoing adjustment to a prolonged period of low oil and gas prices and somewhat slower
growth in the US, combined with financial risks from rising house prices and household debt
levels pose downside risks to our economic and fiscal projections. However, we base our stable
outlook on the expectation that continued vigilance by Canadian authorities reflective of very
strong institutions will succeed in mitigating such risks, thereby preserving Canada's Aaa
sovereign credit profile.
 https://www.moodys.com/research/Moodys-Affirms-Canadas-Aaa-Rating-Maintains-Stable-
Outlook--PR_356639