Canada’s budget watchdog says the federal government may miss its fiscal targets if it goes along with the Bloc Quebecois’ demands for expanded senior benefits in exchange for keeping the minority Liberal Party in power.
Last week, Bloc Leader Yves-François Blanchet confirmed his party would vote against a motion of no confidence in the Conservatives due to be held this week, giving the Liberals enough support to avert an imminent election.
In return, Blanchette is calling on Prime Minister Justin Trudeau’s government to extend, through private member’s legislation, an increase in Old Age Severity (OAS) payments to pensioners aged 65 to 74. The Liberal Party had previously announced a 10% increase in OAS payments in 2022, but only for those aged 75 and over.
“We have repealed a law that is now fundamental to the existence of this regime. This is what is called power,” Blanchette told reporters on Thursday.
But in an interview with Vassy Kapelos on CTV’s Power Play on Monday night, Parliamentary Budget Officer Yves Giroux said further expansion would be costly for the federal government: He calculates that Brock’s request would cost more than $3 billion a year, for a total cost of $16.1 billion over five years.
“It will be a little bit difficult to apply that to the fiscal framework that the government put forward in the last budget. It will be a significant change, to say the least,” Giroux told Kapelos. He noted the government’s goal of keeping the budget deficit below $40.1 billion this fiscal year and reducing both the debt-to-GDP ratio and the budget deficit-to-GDP ratio in 2024-2025. Additionally, the government aims to keep the budget deficit at 1% of GDP by 2026-2027.
“All these constraints would be at serious risk if the government met that demand without cutting other spending,” he said.
Deputy Prime Minister and Finance Minister Chrystia Freeland was asked Tuesday about the EU’s demands and whether the federal government could cover the costs. Freeland would only say that “discussions are ongoing.”
“We’re having good discussions with both the Bloc Party and the New Democrats on any economic package,” Freeland said.
CTV Power Play’s full interview with Parliamentary Budget Officer Yves Giroux can be viewed in the video player at the top of this article.
