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    • Economists say Liberal-NDP deal raises deficit, inflation alarm bells

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    OTTAWA -

    Prime Minister Justin Trudeau's surprise political deal with the smaller left-leaning New Democrats will lead to heftier deficits and threatens to upend the Liberal government's promise to rein in runaway inflation, economists said.

    Trudeau on Tuesday announced a rare written "supply-and-confidence" agreement that will see the NDP prop up his minority government until 2025 in exchange for more social spending.

    Top of the list is a dental-care program for low-income Canadians and a national prescription drug plan, both of which will likely be costly, permanent spending initiatives, economists said. Details of the two programs should emerge in the federal budget due to be presented next month.

    With the Canadian economy already at capacity and price pressures mounting, incremental spending - even if merited - could complicate efforts to keep inflation expectations moored, said Rebekah Young, director of fiscal and provincial economics at Scotiabank.

    "The finance minister risks further undermining Ottawa's credibility in its commitment to tackling inflation," she said.

    Young expects the pact, which has been denounced by the main opposition Conservatives, will lead to an additional $15 billion-$20 billion in government spending over the life of the three-year deal and potentially $40 billion in total by fiscal 2026-2027.

    The jump in tax revenue resulting from surging inflation will likely mask much of the new spending in the near term, she said, but the deal could add half a percentage point to structural deficits over the medium term.

    Fitch Ratings stripped Canada of one of its coveted triple-A credit ratings in June 2020. S&P Global Ratings and Moody's Investors Service still give Canadian debt their highest ratings.

    The federal government's COVID-19 pandemic support programs have already pushed Canada's debt-to-GDP ratio to a projected peak of 48.0% in 2021/2022 from 30.9% in 2018/2019. It could decline more slowly from there due to the increased spending.

    "It does look like it would open the pocket books at the federal level," said Pedro Antunes, chief economist at the Conference Board of Canada.

    Canada, like other countries globally, is grappling with red-hot inflation, which hit a three-decade high of 5.7% in February. At the same time, businesses are scrambling to hire enough workers to meet booming demand.

    New federal dental and prescription drug programs would require more specialized workers, who may demand higher wages, which could then create another round of inflation, Antunes said.

    "We can start getting to that vicious spiral that we don't want to be in," Antunes said.

    DEFENCE SPENDING

    The Liberals pledged $78 billion in stimulus over three years during last year's election campaign. The NDP's platform had priced a national drug plan at $38.5 billion over five years and $11 billion for dental coverage.

    Spending under the deal will likely look quite different.

    With Canada's economy firing on all cylinders, analysts say the centre-left Liberals should be focused on balancing the budget rather than adding stimulus so businesses do not grow concerned about the possibility of higher taxes.

    "The right path is to grow the economy to pay for new spending measures 鈥 not the other way around," said Robert Asselin, senior vice president of policy at the Business Council of Canada.

    Adding to swelling expenses is the response to Russia's invasion of Ukraine, which may prompt Canada to boost defence spending.

    "Our investments in our Canadian Armed Forces will continue to increase and we will have more to say about this at the appropriate time," said Trudeau, speaking at a summit in Brussels to address the Ukraine crisis.

    Trudeau said his deal with the NDP will not impact defence spending plans.

    IN DEPTH

    Opinion

    opinion

    opinion Don Martin: How a beer break may have doomed the carbon tax hike

    When the Liberal government chopped a planned beer excise tax hike to two per cent from 4.5 per cent and froze future increases until after the next election, says political columnist Don Martin, it almost guaranteed a similar carbon tax move in the offing.

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    • Donations are quickly pouring in for the family of a young woman who was found dead inside a Walmart in Halifax last weekend.

    • Another local homeowner says trees owned by the City of Regina have caused damaged to his property for years and has resulted in tens of thousands of dollars spent from his own pocket.

    • An investigation into a climate of fear at a Montreal primary school has reignited a debate about secularism in Quebec's education system, with the provincial government pledging to consider new measures to keep religion out of classrooms.

    • Ontario needs more money to properly deliver the national $10-a-day child-care program now and beyond the life of the current agreement, the province's education minister has told the federal minister in a new letter.

    • Legend has it that on a dark evening in 1988, friends of Supt. Joe Atherton quietly buried his body on the site of the old provincial RCMP headquarters in Vancouver.

    • Richard Robert Mantha, accused of kidnapping and sexually assaulting several women at a rural property east of Calgary, has fired his legal counsel again.

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    • Vancouver Fire Rescue Services received its first shipment of new firefighting gear on Wednesday, advancing the department's plans to reduce cancer risk for its members.

    • A meteor lit up our region's sky last night 鈥 with a large fireball shooting across the horizon over Lake Erie at around 7:00 p.m.

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    • A new resident at a Manitoba animal rescue has waddled her way into people's hearts.

    • The Radium Hot Springs in British Columbia's Kootenay National Park has undergone a $29-million makeover.

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    He is a familiar face to residents of a neighbourhood just west of Roncesvalles Avenue.

    A meteor lit up our region's sky last night 鈥 with a large fireball shooting across the horizon over Lake Erie at around 7:00 p.m.

    Residents of Ottawa's Rideauview neighbourhood say an aggressive wild turkey has become a problem.

    A man who lost his life while trying to rescue people from floodwaters, and a 13-year-old boy who saved his family from a dog attack, are among the Nova Scotians who received a medal for bravery Tuesday.

    A newly minted Winnipegger is hoping a world record attempt will help bring awareness for the need for more pump track facilities in the city.

    A Springfield, Ont. man is being hailed a 'hero' after running into his burning home to save his two infant children.

    Hortense Anglin was the oldest graduate to make her way across the platform at York University's Fall Convocation ceremony this week. At the age of 87, she graduated with an Honours degree in Religious Studies.

    Looking for a scare with good intentions this Halloween season? The ghosts and ghouls of Eganville, Ont. invite families to tour the Haunted Walk at Lekbor Manor.

    The image of a sleepy Saskatchewan small town with 'not a lot going on' is a well-known anecdote. However, one Saskatchewan company is hoping to change that 鈥 and allow communities both on and off the beaten path to share their stories and advertise what they have to offer.

    • Legend has it that on a dark evening in 1988, friends of Supt. Joe Atherton quietly buried his body on the site of the old provincial RCMP headquarters in Vancouver.

    • Since the record-breaking atmospheric river hit Metro Vancouver last Friday, 266 drivers have filed ICBC claims for water damage to their vehicles. In some places, flood water was so deep, cars floated away with the drivers still inside, and the engine running.

    • It was a result even the Vancouver Whitecaps hadn't dared to dream of.

    • BREAKING

      BREAKING

      Four people are dead and another is in hospital following a fiery crash in downtown Toronto that happened overnight on Lake Shore Boulevard.

    • It's a dream for many Canadians, trying to save up enough money for a down payment on their very first home. That was also the dream for the Esmeralda family, a family of five with two dogs who currently live in a Scarborough apartment building.

    • Richard Robert Mantha, accused of kidnapping and sexually assaulting several women at a rural property east of Calgary, has fired his legal counsel again.

    • A proposed inner-city apartment complex development by Anthem Properties is raising concerns for some residents of Hillhurst and West Hillhurst.

    • WEATHER

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      A consistent weather pattern will have Thursday turn out to be very similar to Wednesday.

    • Quebec鈥檚 Bureau of Independent Investigations (BEI) is investigating after police in Gatineau, Que. shot and killed a man who allegedly stabbed an officer during an investigation.

    • The City of Ottawa is hoping to learn this week just how many residents in the capital are homeless.

    • Emergency crews responded to a call for a collision involving a pedestrian on Princess Louise Drive at Hauteview Crescent just before 7:30 a.m. Thursday.

    • An investigation into a climate of fear at a Montreal primary school has reignited a debate about secularism in Quebec's education system, with the provincial government pledging to consider new measures to keep religion out of classrooms.

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      WEATHER

      High temperatures have been trending in Montreal this season, but that could soon come to an end.

    • Montreal Mayor Val茅rie Plante says she will quit municipal politics after serving the final year of her second term, which comes to an end in November 2025.

    • WEATHER

      WEATHER

      Wind looks to be the big weather story today. We should get gusts in the 30-40 km/h range starting late this morning and continuing through to early evening (7p.m.'ish).

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    • WorkSafeNB is investigating a workplace fatality that took place in Moncton, N.B., last week.

    • A volunteer treasurer is facing charges after funds went missing from Nova Scotia Premier Tim Houston鈥檚 riding.

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    • A search has started at Prairie Green Landfill for the remains of two victims of a serial killer.

    • A 59-year-old man has died following a crash involving three vehicles that started after a tire fell off a car on the Trans-Canada Highway Wednesday morning in the RM of Tache.

    • Another local homeowner says trees owned by the City of Regina have caused damaged to his property for years and has resulted in tens of thousands of dollars spent from his own pocket.

    • Regina police says officers will provide an update Thursday in its search for the suspect of a homicide that took place in the city during the summer of 2023.

    • Detective Robert Hofstetter examined Erb鈥檚 home after her death and came to several conclusions based on the blood stains he found there.

    • A psychologist who recently assessed Geovanny Villalba-Aleman believes he may have experienced a psychotic break before stabbing three people in a gender studies class at a University of Waterloo.

    • Corrections Service Canada has confirmed a women鈥檚 prison in Kitchener is in lockdown.

    • Canada's discount airline is suspending operations to and from Saskatoon.

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    • Sudbury police say a weapons call about a man pointing a gun at a woman in the city鈥檚 West End on Tuesday afternoon led to multiple charges.

    • A 72-year-old driver was charged Wednesday with following two closely after a five-vehicle crash sent several people to hospital in Parry Sound.

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    • A 34-year-old motorcyclist has died following a collision in Barrie鈥檚 south end on Tuesday.

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    • A man who fired at least 19 gunshots at an RCMP detachment in northern British Columbia, narrowly missing officers inside, has won a reduced prison sentence from the province's highest court, which ruled the sentencing judge failed to fully weigh the man's mental illness at the time.

    • Dave Lindsey began growing giant pumpkins to bring a bit of magic to his grandkids' Halloween.

    • A U.S. District Court judge in Montana has sentenced a 27-year-old man from Kelowna, B.C., to 18 months in prison for using fake names to buy guns with the aim of selling them in Canada.

    • Nearly two years after a man was stabbed to death in downtown Kelowna, RCMP have made an arrest in the case.

    • A Lethbridge recovery centre, tasked with helping residents struggling with addictions, is celebrating its first year of success in the community.

    • Graduate students looking to become mental-health professionals will have more opportunities to study in the University of Lethbridge鈥檚 Master of Education Counselling Psychology program.

    • A dazzling light display is making its return to Lethbridge this holiday season.

    • The lack of 24-hour public washrooms has been a long-standing issue in the Sault, especially considering the rise in homelessness.

    • The union representing the fire rangers with the Ministry of Natural Resources says money won鈥檛 fix the systemic problems in the workplace.

    • Rallies by a group called Voices Against Violence took place across the country on Monday, including Sault Ste. Marie.

    N.L.

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