Budget deficits are a “mortgage” that must be paid down by governments to ensure economic growth, Canada’s Treasury Board President Tony Clement said.
The Canadian government’s plans to cut C$4 billion ($3.9 billion) in annual spending by the fiscal year beginning April 2014 will help the nation’s recovery, Clement said.
“We want to ensure that we can continue to invest in the priorities of Canadians and that the economy can continue to grow and create jobs,” Clement said in the prepared text of a speech to the U.S. Chamber of Commerce in Washington. “That’s also why we launched our deficit reduction action plan.”
He said Canada’s elimination of its budget deficit in the 1990s was one of the factors that allowed the country to handle the 2008 global slump better than others.
“We learned that deficits are a mortgage on future economic growth that create higher taxes for our kids and our grandkids,” said Clement, whose department is leading the spending review.
Asked after his speech whether Canada was trying to tell the U.S. how to handle its budget, Clement said, “It is important that we let American political leaders decide what is best for America. All we can do is continue to show our support and our concern.”
“My message here was just about the Canadian experience,” he said. “If that’s helpful for political leaders to know that’s great.”
Canada’s budget deficit was a smaller-than-forecast C$33.4 billion in the year ended March 31, the Finance Department announced today.