The federal government posted a $2.7-billion deficit in September – just as it did in September 2011 – adding further evidence that Ottawa's bottom line is not likely to improve much this year.
The federal government ran a budget deficit of $26.2-billion in 2011-12 and Finance Minister Jim Flaherty's fiscal update earlier this month projected this year's deficit will come in at $26-billion.
In spite of this projection for back-to-back $26-billion deficits, Mr. Flaherty and Prime Minister Stephen Harper are promising to erase the deficit entirely before Canadians return to the polls in the fall of 2015.
On Friday morning, Finance Canada released its latest monthly tracking of spending and revenues – called the Fiscal Monitor – which showed the 2012-13 deficit is at $8.9-billion over the first six months of the year, compared to $11.8-billion during the same six months a year earlier.
The details of spending trends over the first six months of this year suggest Ottawa is already making a dent in the direct federal spending that it can control.
Transfers to Canadian cities and communities are down 18.3 per cent, direct federal transfers for aboriginal affairs are down 8.2 per cent, agriculture transfers are down 22 per cent and foreign affairs transfers are down 15.3 per cent.
Overall, total program expenses are up 1.4 per cent, but that takes into account mandatory increases in large provincial transfer programs. For instance, the Canada Health Transfer increases by 6 per cent a year until 2017-18 and the Canada Social Transfer increases by 3 per cent a year.
Mr. Flaherty's fall update projected larger deficits than originally forecast in his March 2012 budget, pointing to slower economic growth and declining commodity prices. A new report from Statistics Canada released Friday supports that pessimism, noting that Canada's economic growth in the third quarter was just 0.6 per cent, which was lower than analysts expected.