Finance minister says government will turn off financial taps, but not before pandemic ends

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“It’s just not practically possible, never mind fair, to ask workers to stay home or businesses to shut their doors without providing them with the financial support they need.”

The government’s last update in the summer projected Canada would run a $343 billion deficit in 2020, pushing the country into more than a trillion dollars in debt for the first time in its history. Those numbers didn’t include some of the expansions to programs the government offered up last month. Freeland said new projections on the country’s finances would be coming soon.

The government has also promised a fiscal update this fall, but no date has been set for that.

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Freeland said she is aware that the level of debt is a concern for many Canadians, but said the government can afford it. She said with interest rates so low, even this massive amount of debt doesn’t weigh heavily on the country’s balance sheet.

“Canada’s interest charges as a share of GDP today are at a 100-year low,” she said.

The Liberals have previously set so called “fiscal anchors” to guide their spending. The first in the 2015 campaign was three $10 billion deficits before a return to balance. This was followed by a goal to keep the debt to GDP ratio below 30 per cent.

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But during the pandemic, as the red ink flowed across the government’s balance sheet, there has been no discussion of any anchor to their spending.

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Freeland made it clear the government would return to a more measured approach after the pandemic.

“I am not among those who think Canada should have a fling with Modern Monetary Theory, which holds that deficits don’t matter for a government that issues debt in its own currency,” she said. “We will resume the long standing time-tested Canadian approach with fiscal guardrails and fiscal anchors that preceded this pandemic.”

She did not specify what those guardrails or anchors would be. She said the government would focus on measures in the months ahead to get through the pandemic and then to relaunch the Canadian economy to bring back as many jobs as possible.

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