Harper rejects financial stimulus package

Spending that causes deficit ‘ makes absolutely no sense,’ PM insists

Stephen Harper is making it clear that pretty much nothing will make him stray from his balanced- budget target this fiscal year.

The prime minister slammed the door Tuesday on the possibility the government would open the vault for a stimulus program to help the economy, which has been hobbled by lower oil prices.

Harper’s remarks came a day after the government unloaded its multibillion- dollar stake in General Motors, a deal expected to help the Conservatives achieve their long- running pledge to balance the upcoming election- year budget.

The government isn’t contemplating stimulus because the weakened economy is still expected to grow, albeit at a slower rate than anticipated, Harper told a news conference in Vancouver.

“Embarking on a major stimulus program when the economy’s growing, and driving us back into deficit, makes absolutely no longterm economic sense whatsoever,” he said.

Harper argued the government will be injecting a “fair bit of money into the economy” this year — even with a balanced budget — through measures such as “very large- scale tax cuts” for families and increased infrastructure spending.

This week, the government also found a way to pump cash into the federal bank account.

On Monday, Ottawa announced it had sold all 73.4 million of its GM shares, the leftovers from the 2009 effort to bail out the thenstruggling automaker.

The Finance Department said Goldman, Sachs & Co. acquired the stock in an unregistered block trade, but few details of the transaction have been made public.

Taxpayers’ GM holdings were worth more than $ 3.3 billion Monday, based on a $ 36.66 US price at the close and an exchange rate of $ 1.2473.

But it’s still unclear exactly how much cash the sale will generate for the federal government.

Harper has repeatedly insisted the government will erase the deficit despite the oil slump — a promise that could be key to his chances in this year’s election, scheduled for October.

The transaction came a few days into the 2015- 16 fiscal year, which means the proceeds will help pad the bottom line in this year’s budget, to be delivered April 21.

In November, the government predicted a $ 1.6- billion surplus for 2015- 16, but crude prices tumbled even further in the months that followed.

The lower oil prices are expected to indirectly siphon billions of dollars from federal revenues.

U. S. benchmark West Texas Intermediate crude has gained almost $ 5 US a barrel over the past two days after rising $ 1.84, or 3.5 per cent, on Tuesday to settle at $ 53.98 on the New York Mercantile Exchange.

The oil slump also forced Finance Minister Joe Oliver to take the rare step of postponing the release of the budget until April. The fiscal blueprint is usually presented in February.

Oliver said his department needed more time to get a handle on the market instability caused by the oil shock.

In hindsight, however, observers and political opponents wonder if postponing the budget until April was done — at least in part — to allow the government to put the proceeds from the stock sale on the books in the current fiscal year.

“They will do anything to create a surplus on the eve of an election,” said Liberal finance critic Scott Brison. NDP industry critic Peggy Nash said the timing of the GM sale seems suspect with the budget’s release only a couple of weeks away.

“It seems as though the Conservatives have made a decision to sell the shares simply because it’s a politically convenient time,” Nash said Tuesday.

“Whether Canadians are getting the best deal for their investment remains to be seen.”

On Monday, Oliver said in a statement that the GM sale means taxpayers are no longer exposed to the market.

The government had long voiced its intention to sell the shares.

“We never believed the government should be a shareholder of a private sector company for an indefinite period of time,” Oliver said.