Tories committed to balanced budget, except …
Finance Minister Joe Oliver will announce legislation on Wednesday committing the government to keeping a balanced budget, except under “extraordinary circumstances.”
The only “acceptable deficit,” a government source said Tuesday, would be in the event of a recession or during a war or natural disaster with costs exceeding $ 3 billion in a fiscal year.
But even then, the legislation would require the minister to appear before the House of Commons finance committee within 30 days of a published deficit to outline timelines for returning to a balanced budget.
If a deficit were to occur during normal economic times, there would be an automatic freeze on departments’ operating budgets, as well as other consequences, which will be spelled out on Wednesday.
The source said the government was keeping a commitment it made in the October 2013 throne speech, which promised to balance the books in 2015 and introduce balancedbudget legislation.
The scheduled announcement Wednesday comes as federal parties are girding for an Oct. 19 federal election.
Some political observers have previously derided balanced- budget legislation as a gimmick, saying that history has shown governments can always find wriggle room to get around the rules.
The Parliamentary Budget Officer last fall said in a report that enacting balanced- budget legislation could produce “unintended consequences,” including handcuffing the government’s flexibility to respond to economic downturns and cause the government to download costs to the provinces.
Eight provinces and two territories enacted balanced- budget legislation in the 1990s; most ended up amending, suspending or repealing the legislation following the global financial meltdown in 2008, the report said.
On Tuesday, Prime Minister Stephen Harper rejected the suggestion of any type of stimulus program to help the economy, which has been hobbled by tanking oil prices.
At an event in British Columbia announcing expanded eligibility for Canada Student Grants for low- and middle- income families, Harper said “embarking on a major stimulus program when the economy’s growing, and driving us back into deficit, makes absolutely no longterm economic sense whatsoever.”
Earlier in the week, the government announced it had sold all 73.4 million of its shares in General Motors Co. as a way to pump cash into the federal bank account.
It is expected that Oliver on Wednesday will highlight how the Conservatives are more responsible than the opposition parties with fiscal management — spending during “stormy times” and saving when “seas are calmed.”
Last week, Oliver told reporters he plans to deliver his budget on April 21. The balanced budget legislation will be introduced as part of the budget. Oliver said he put off the budget announcement — which usually happens in February — so he could assess the impact of falling oil prices.
“The good news is our fiscal situation is sound and economic growth has been solid,” he said at the time.