Fall Economic Statement Shows Deficit at $62 Billion, Overshooting Guardrail by $20 Billion

Government House Leader Karina Gould tables the Fall Economic Statement in the House of Commons, in Ottawa, on Dec. 16, 2024. The Canadian Press/Adrian Wyld

The federal government tabled its 2024 Fall Economic Statement amid a chaotic day in Ottawa, showing that the federal deficit for the 2023–24 fiscal year has grown to $61.9 billion.

The now former Deputy Premier and Finance Minister Chrystia Freeland had pledged in the previous fall economic statement to keep Canada’s deficit just below $40.1 billion, which is $21.8 billion less than the number reported in this year’s statement.

This year’s statement, tabled Dec. 16, said the deficit would have been approximately $40.8 billion if not for “significant unexpected expenses related to Indigenous contingent liabilities” and allowances for COVID-19 pandemic supports, costing some $16.4 billion and $4.7 billion respectively.

However, the government did keep its promise to maintain a declining debt-to-GDP ratio, if only just barely. That number is projected to decline from 42.1 percent in fiscal 2023–24 to 41.9 percent in 2024–25. It is expected to continue falling every year of the forecast horizon, reaching 38.6 percent in 2029–30.

The 279-page document, which calls for over $20 billion in new spending, includes $1.3 billion over six years to bolster Canada-U.S. border security amid the threat of tariffs by U.S. President-elect Donald Trump. The funding will go to Public Safety Canada, the Canada Border Services Agency, the Communications Security Establishment, and the Royal Canadian Mounted Police. The document does not detail exactly how the money will be spent, but the federal government has suggested the funding will be used for additional drones and helicopters.

The incoming U.S. administration under Trump has threatened 25 percent tariffs on Canada if it does not take sufficient action to stop illegal drug smuggling and migration across the border.

The document also calls for $17.4 billion to extend the Accelerated Investment Incentive—which provides for temporary tax changes allowing companies to write off the value of investments immediately. In addition, it seeks $1.1 billion to boost the Scientific Research and Experimental Development tax incentive program.

It also includes the Liberal government’s promised tax holiday, which came into effect on Dec. 14 and will last for two months. The Goods and Services Tax / Harmonized Sales Tax break is expected to cost $1.6 billion. However, the $250 cheques for working Canadians, which were proposed recently at the same time as the tax holiday, have been excluded from the economic statement.

The government projects the deficit will fall to $48.3 billion for the current fiscal year, amounting to a deficit-to-GDP ratio of 1.6 percent. The deficit is projected to eventually fall to $31.0 billion in 2026–27, or a deficit-to-GDP ratio of 0.9 percent, and to $23 billion in 2029–30, or a ratio of 0.6 percent.

As is typical for fall economic statements, the document portrays the government’s finances in a positive light. It said Canada’s economy “has achieved a soft landing” despite global challenges associated with the COVID-19 pandemic and Russia’s invasion of Ukraine.

“For all of 2024, inflation has been within the Bank of Canada’s target range, and price stability has been restored across most sectors,” the document said. “With stable inflation, the government can continue to pursue strategic investments aimed at supporting productivity and raising living standards.”

Opposition Parties’ Reaction

The fall economic statement was originally set to be presented by Freeland, but her resignation from cabinet on the morning of the scheduled presentation threw the process into disarray. The statement was tabled by Liberal House Leader Karina Gould, who did not give an accompanying speech.

Conservative Leader Pierre Poilievre reacted to the economic statement by saying he was “flabbergasted by the news [concerning Freeland] that has just been made public.” He said Freeland’s original goal of a $40.1 billion deficit was a “mind-bogglingly large number,” but the $61.9 billion number was even worse.

“Not even during the massive global economic crisis did the deficit come anywhere close to that. And here we are, with the global economy growing, with the American economy booming in stable times, this deficit is 100 percent at the feet of this irresponsible prime minister,” he said during the debate in the House of Commons on Dec. 16.

Poilievre added that his party would vote against the fall economic statement in a confidence vote.

NDP MP Don Davies said the statement shows that the Liberals are “unable to respond to the realities that Canadians are experiencing,” criticizing a lack of action by the Liberal Party on climate change, drug overdoses, and the cost-of-living crisis.

“What they have offered today is totally unresponsive to the crises facing our country. They are simply too weak, too self-interested, too full of infighting, and too beholden to corporate interests to fight for people,” Davies said.

Bloc Québécois MP Gabriel Ste-Marie criticized the statement for not providing more details on how the $1.3 billion for the border would be spent.

“What will this money be used for? For drones, for more Border guards, for helicopters? Well, there’s no plan here. There’s a number in the budget. A plan will eventually follow,” Ste-Marie said.