Finance Minister Bill Morneau will give an update on Canada’s fiscal health today as he delivers the fall economic statement.
Morneau’s update, a document usually released several months before the federal budget, will provide more context for the minister’s optimistic predictions for the coming year.
The minister has said he expects the Canadian economy to continue to grow, and to be one of the top performing economies in the G7 by the end of next year.
The document also will lay out project and program spending for the coming months.
But the briefing is coming on the heels of a bad month for workers. Canada lost 71,000 jobs in November, the majority of them in Quebec and Alberta, according to Statistics Canada.
Business and personal bankruptcies in Canada also rose by 8.5 per cent this past year, compared to just 1.4 per cent for the year before.
Opposition capitalizes on declining job numbers
The Conservatives used those numbers to bolster their attacks against the Liberals in the House of Commons, saying Canadians are feeling financially squeezed and the government’s choices are hurting the economy.
Despite a month of disappointing news, overall job numbers are still up 300,000 over the previous year.
Last week the Conservatives called on the minister for an “urgent” economic update. Finance critic Pierre Poilievre said the opposition wants to see a path back to a balanced budget, tax cuts for entrepreneurs and a change to regulations that hinder small businesses.
“The storm clouds of our economy have been gathering overhead for a long time, so if they are this ill-prepared for the trouble that is unfolding, it says something about their ability to govern,” he said in a press conference last Sunday.
The Liberals said in their election platform that they plan to reduce the deficit to $21 billion by 2023 at the end of a four-year mandate. In this minority Parliament situation, their government might not last that long.
Morneau’s newly issued mandate letter explains he is to adhere to four principles to implement the Liberals’ fiscal plan:
- Reducing the federal debt “as a function of our economy” (usually measured as the debt-to-GDP ratio).
- Increasing investor confidence in the Canadian economy and maintaining Canada’s credit rating.
- Investing in measures that boost the quality of life for Canadians.
- Preparing for a potential economic downturn.
No ‘sunny horizon’ says economist
The economy’s growth is projected to slow in 2020. It’s not a recession, but that doesn’t mean it’s cause for celebration either. In the third quarter of this year, real gross domestic product grew at an annualized rate of 1.3 per cent, compared with a revised reading of 3.5 per cent for the second quarter.
“There isn’t a real sunny horizon when it comes to economic growth. It appears to be anemic. It looks like it will continue to be anemic,” David Macdonald, a senior economist at the Canadian Centre for Policy Alternatives, told CBC News.
“And as a result we will likely not see the continued high wage growth for workers despite the fact that we have relatively low unemployment.”
Canada’s unemployment rate of 5.9 per cent has been a point of pride for this federal government — it’s one of the lowest rates the country has seen since the 1970s — but wages for workers continue to be relatively stagnant.
The economy is projected to grow less than two per cent beginning next year, according to a Conference Board of Canada report.
By Macdonald’s analysis, that growth is “not terribly good” news.
The report found that low unemployment will actually constrain the economy’s ability to grow, while rising interest rates quell spending.
The Bank of Canada recently maintained the benchmark interest rate at 1.75 per cent, even as Governor Stephen Poloz noted Canada has “not been immune” to the global economic slowdown.