Fiscal update to lay out competitiveness plan, close loop on some Liberal vows

morneau

The federal government will release a fall economic update later today that will seek to close the loop on some of its outstanding mandate commitments, leaving the door open for the Liberals to use next year's budget as their 2019 election platform.

The document will also include Finance Minister Bill Morneau's long-awaited plan to help Canada compete for investment dollars, which many warn has become increasingly difficult following major tax and regulatory changes in the United States.

Morneau has faced pressure to lower Canada's corporate rate – but the government has signalled it will focus on targeted measures to accelerate investment rather than across-the-board tax cuts.

A government official, who spoke on condition of anonymity, says Ottawa's competitiveness blueprint will be fiscally responsible and designed to entice companies to choose Canada over the U.S. when it comes to investments.

The official says the fall statement will also show that Canada's annual projections for the federal deficit and the debt burden will continue to slide downward on trajectories similar to those outlined in the 2018 budget.

The Liberals have faced regular criticism from the Opposition Conservatives for abandoning their 2015 vow to run only modest annual shortfalls of no more than $10 billion and to eliminate the deficit by 2019.

Morneau's budget last February predicted an $18.1-billion shortfall for this fiscal year – a number expected to gradually shrink to $12.3 billion in 2022-23, including annual $3-billion cushions to offset risks.

The Liberals have no timetable to eliminate the deficits even though the economy is running close to full strength, which has raised concerns among some economists.