Finance Minister Jim Flaherty
Finance Minister Jim Flaherty will deliver his new budget on Feb. 11, in the middle of the Sochi Winter Olympics.
He is playing down suggestions that he could balance the books this year — a year earlier than expected. He hasn’t closed the door entirely, however.
The government takes a “substantial” $3-billion adjustment for risk, he said Monday after a meeting with economists. But this year has seen major floods in Alberta and New Brunswick, so “we’re being prudent.”
Ottawa took a $3 billion hit with the Alberta floods, he said. So he has to build in a cushion to respond to unforeseen events.
“We know we’re on track to balance in 2015-16 and we said when we ran the deficit, because of the great recession, we said we would balance in the medium term and we’ll balance in the medium term,” he said. “But we’re going to be cautious in the meantime.”
He told the Commons the new budget will continue to focus on jobs and economic growth.
Royal Bank economist Craig Wright said he thinks it’s possible for the Tories to eliminate the deficit in the 2014-15 fiscal year, which starts in April.
“Our forecast, we would not be shocked to see them come into balance that year if they chose to,” he said.
Flaherty is projecting a deficit of $5.5 billion and there’s $3 billion in reserves, Wright said. “Then you just need a small swing on any of these big measures — either revenue or expenditure — to get back in balance.”
The Harper government has long touted its economic stewardship as a key strength, something Flaherty said will be underscored in the next budget. But he wouldn’t give any hints as to what the document might hold.
He has, however, played down the idea that there might be some goodies coming, saying such spending will have to wait until after the books are balanced.
He joked that he’s not a big spender, but there may be some Conservatives who would spend more.
“I’m not going to spend a lot of money, but I’m not the only person who makes these decisions,” Flaherty said.
It’s expected that a better balance sheet in 2015 will allow the government to pay for some long-promised campaign plums, including income splitting for tax purposes.
Flaherty said he will post a surplus in 2015, but won’t do it by raising taxes or cutting transfers to the provinces.
The Tories are focused on balancing the books, no matter what the cost to people, said NDP finance critic Peggy Nash.
They’re spending less on infrastructure and health transfers to the provinces, she said. There are still hundreds of thousands more unemployed than when Prime Minister Stephen Harper took power in 2006.
The austerity measures are contributing to the low performance of the economy, she said.
“Their approach is not getting the economy moving again,” Nash said.