Ottawa could balance books a year early

OTTAWA — Finance Minister Jim Flaherty’s fall economic update Tuesday is expected to show the federal government on track to balance the books by 2015-16, but some believe the federal government’s improved finances mean the Conservatives can eliminate the deficit a year earlier.

Recent financial data have shown the federal government’s deficitelimination projections are ahead of schedule, leading many analysts to wonder whether the red ink — estimated in the budget at $18.7 billion for the current fiscal year — could be wiped out in the 2014-15 budget year.

Flaherty and Prime Minister Stephen Harper have promised to eliminate the deficit by the next federal election, which must occur by the fall of 2015. But Ian Lee, assistant professor at Carleton University’s Sprott School of Business in Ottawa, said it looks more and more likely the federal government is on the verge of balancing the budget early.

“It’s possible. In fact, from all the latest reports, in terms of being well ahead of their targets, it looks increasingly likely,” Lee said Monday.

… in terms of being well ahead of their targets, it looks increasingly likely IAN LEE, CARLETON UNIVERSITY’S SPROTT SCHOOL OF BUSINESS

He believes the government is probably deliberately under-promising and over-delivering on its financial numbers.

The federal government is facing billions of dollars in unexpected disaster-assistance costs to help with the Alberta floods, and with the costs of the train derailment and explosion in Lac-Mégantic, Que. Yet, tax revenues are up and federal departments continue to spend less than authorized, Lee noted.

“They’re winning on both sides of the ledger this time … They’re probably cutting more than we realize and the revenues are flowing in faster than were projected,” Lee added.

The federal government’s recently released annual financial report, along with public accounts tabled in the House of Commons, appear to confirm that.

The federal shortfall for the 201213 budget year was $18.9 billion, $7 billion less than the $25.9 billion projected in the March budget, and almost equal to the deficit initially predicted for the current year.

As well, the financial reports show federal departments have been spending billions of dollars less than their approved budgets, which is also bolstering Ottawa’s bottom line.

Derek Burleton, deputy chief economist of TD Bank Financial Group, said the $7-billion improvement on last year’s deficit puts the government in a much better position to balance the books a year earlier, in 2014-15.