Oliver vows balanced budget law

Federal legislation would fulfil a long-standing Conservative promise

The Conservative government will introduce balanced budget legislation, federal Finance Minister Joe Oliver confirmed in a speech in Toronto Wednesday.

The proposed law would prevent future governments from running budget deficits except in “extraordinary circumstances,” such as a recession, war or natural disaster, Oliver told the Economic Club of Canada.

Governments that run deficits for any other reason would see their program spending “automatically” frozen and cabinet ministers take a 5-per-cent pay cut until balance was restored, he said.

“Canadians expect their governments to spend within their means,” Oliver told the luncheon at the Intercontinental Hotel.

Families, he noted, don’t have the option of printing money or putting off paying their debts indefinitely.

The announcement fulfils a promise the Conservatives made in their October 2013 throne speech.

The plan comes just weeks before the federal government will deliver its first balanced budget in seven years.

Opposition critics were quick to lambaste the Conservative government, saying it had run budget deficits for seven years and added $150 billion to the national debt.

“It’s absolute hypocrisy, near toxic levels of hypocrisy coming from Minister Oliver today,” said Liberal finance critic Scott Brison, who attended the speech.

“It’s an announcement full of bitter ironies,” said Matthew Kellway, NDP MP for Beaches—East York.

The global financial crisis and recession of 2008-09 saw governments around the world run up huge deficits on corporate bailouts and economic stimulus measures.

Oliver said the Canadian government had made tough choices in response to exceptionally challenging economic times.

In a largely campaign-style speech, Oliver urged Canadians to make the right choice this fall and avoid returning Canada to the “reckless” spending in the 1970s under the late Pierre Trudeau, who was then prime minister.

It will be the first time a federal government has had balanced budget legislation, the parliamentary budget office noted in a report.

Such laws can be beneficial but can also have unintended consequences, such as encouraging asset sales at less than optimal prices, the report noted.