Feds Will Keep Budget Promises Despite Economic Uncertainty, Says Minister

Minister of Tourism and Associate Minister of Finance Randy Boissonnault speaks to the media at the Hamilton Convention Centre in Hamilton during the second day of meetings at Liberal Cabinet retreat, on Jan. 24, 2023. (The Canadian Press/Nick Iwanyshyn0

The federal government will keep policy promises made in their most recent budget despite growing economic uncertainty, says Tourism Minister and Associate Finance Minister Randy Boissonnault.

He also noted that Ottawa will be taking another “deep dive” look into the country’s economic outlook this year.

Boissonnault spoke to reporters on Jan. 24 from Hamilton, Ont., where he is attending the Liberal cabinet’s post-holiday retreat, the main focus of which is making life more affordable for Canadians, said Prime Minister Justin Trudeau in a previous statement.

Boissonnault was asked by reporters about a recent report co-authored by former Bank of Canada (BoC) Governor David Dodge, which said the federal government is being too optimistic in its economic outlook this year as outlined in Budget 2022 and its Fall Economic Statement (FES) 2022.

The report, released on Jan. 23 by Bennett Jones and the Business Council of Canada (BCC), also said Ottawa is underestimating the likelihood of a 2023 recession.

“I respect the Business Council’s perspective,” Boissonnault told reporters, adding that the federal government regularly consults private-sector economists for their opinions on “where the economy is heading.”

“Our task is to fulfill the promises we made to Canadians, meanwhile keeping tabs on inflation,” he said in French.

“We have another one of those ‘deep dives’ coming and so we’ll take what the private-sector economists say, as well. It’s an average of all of those different scenarios.”

Boissonnault was referring to several scenarios outlined in the BCC’s report that examined how the economy would look if a “full-blown recession” hit Canada in 2023, or if inflation does not cool down by the year’s end.

“[2023] is a turbulent year,” Boissonnault said. “There’s lots of uncertainty.”

‘Fiscal Room’

The minister also said the government’s “fiscal room has tightened,” but added it still has enough to accomplish policy objectives outlined in Budget 2022 while keeping up support for Ukraine and ensuring inflation at home comes down.

“We’re gonna watch things very carefully and be very clear with Canadians and Budget [2023],” he said.

The Bank of Canada is set to announce its decision on the target for the overnight rate on Jan. 25, with economists predicting another key interest rate hike.

The central bank has increased the rate seven consecutive times since early 2022.

Deputy Prime Minister and Finance Minister Chrystia Freeland previously said that while G7 governments can’t bring about “immaculate disinflation,” they can provide additional support to Ukraine, whose victory over Russia would bring about an economic “boost.”

“One thing where we have some real practical levers is we can help Ukraine win, clearly, definitively. And if we do that, if that happens this year... that would be a huge boost to the global economy,” Freeland said on Jan. 18 during a World Economic Forum panel discussion in Davos.

The Canadian Press and Noé Chartier contributed to this report.