Oliver’s dilemma: Surplus allotment
OTTAWA — Federal Finance Minister Joe Oliver heads into his new job with enormous expectations about how he’ll sprinkle around billions of surplus dollars and balance smart economic decisions with populist politics.
The former investment banker and Bay Street veteran, named to the job Wednesday, is well qualified for the job, well respected by fellow cabinet ministers and, during his time in the natural resources portfolio, was already counted on as one of the government’s most important ministers in a key economic file.
But he also brings with him to Finance a reputation for inflammatory language during his time at natural resources, and a penchant for picking fights with some who disagree with the government’s economic policies.
He was a vocal advocate for the energy and mining sectors and travelled the world to defend the government’s oil and gas interests, including fending off “dirty oil” attacks against the Alberta oilsands.
NDP Leader Tom Mulcair said Wednesday that Oliver will be an “embarrassment” as finance minister because of his controversial past comments on climate change and assailing environmental groups opposed to oil and gas development.
Oliver, who is 73, replaced Jim Flaherty, until now the only finance minister the Harper government has known.
In many ways, Oliver lands in the finance portfolio at an envious time: Canada has come through the worst of the economic downturn and the government expects to balance the books next year and post a $6.4-billion surplus in 2015-16.
Flaherty liked to joke that his staff gave him a rubber stamp that said “No” on it — and that he used it regularly.
For Oliver, however, there will be billions of dollars to spend on tax relief and other goodies leading to the 2015 federal election. But with big surpluses come big expectations from cabinet and caucus colleagues hoping for a “yes” on their spending projects.
Craig Wright, chief economist for the Royal Bank of Canada, noted that the budget’s fiscal projections over the next five years (including the $3-billion cushion accounted for each year) will leave the government with fiscal breathing room of about $45 billion.
“That’s fiscal dividend that’s available for tax cuts and debt reduction and spending initiatives,” Wright said.
“It’s easier to say ‘no’ when you’re in a deficit to all requests rather than to pick who should and shouldn’t get money.”
The battle over income-splitting for families is one of the more divisive and expensive debates the Conservatives will face in the coming months. The Conservatives promised last election campaign to introduce income-splitting for couples with children under age 18 — it would cost $2.5 billion annually — once the budget was balanced.
However, Flaherty said last month that the income-splitting policy would have virtually no benefit for many Canadians — which put him at odds with several senior ministers and even Prime Minister Stephen Harper, who called it a “good policy” for Canadian families.
Pressed recently by reporters for his opinion on the income-splitting promise, Oliver said it is “one of the good policies” proposed by the government.
Liberal deputy leader Ralph Goodale, a former federal finance minister in the Martin government, said Wednesday a major challenge for Oliver will be staking out his own turf and preventing people from looking past him to the Prime Minister’s Office.
The bilingual Oliver was born in Montreal and holds a law degree from McGill University and an MBA from the Harvard Graduate School of Business.