Tories set to announce budget law

Finance Minister Joe Oliver will announce legislation on Wednesday committing the government — or any future government — to keeping a balanced budget, except under “extraordinary circumstances.”

The only “acceptable deficit,” a government source said Tuesday, would be 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 balanced-budget 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 wiggle 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.

This is Oliver’s first budget. He was appointed finance minister in March 2014. He came to Parliament after a career in the investment banking industry.