Little wiggle room in Oliver’s budget

Numbers to be finetuned next week

OTTAWA • Now the hard work begins for Canada’s finance minister.

When Joe Oliver delivers his longdelayed budget on April 21, it will be a spending document like no other since the Great Recession.

The country’s finances will be back in the black, so we are promised. And that will mark the first time the federal budget has achieved surplus since 2008, when the Conservative government launched its economic stimulus program in the midst of the global downturn.

A year later, the country was in the red by a record $55.6 billion.

Ottawa is still in a deficit position — to the tune of about $2.9 billion. But that is expected to change in the current fiscal year, which began April 1. Mr. Oliver has promised to produce a $1.9-billion surplus in fiscal 2015-16 and keep it growing.

“We’re looking at a budget that will be providing benefits to Canadians and encouraging more job growth,” the minister told reporters this week in Toronto, where he announced the budget date and confirmed he will meet with privatesector economists Thursday to finetune the numbers.

Federal budgets are usually presented between mid-February and mid-March. This time, the process of preparing a budget has been complicated by the collapse of global oil prices.

“We’ve looked at the numbers very carefully,” Mr. Oliver said. “We’ve looked at the projection to date, but they will be refined next week.”

“We do not, however, need the kind of stimulus budget that we had during the Great Recession — because we’re not in a recession now.”

Even so, where once there was wiggle room, there’s now a squeeze.

“There might be a wee bit of room for some more goodies,” said Douglas Porter, chief economist at BMO Capital Markets. “The plan may well be, though, to announce something now that really has a fiscal cost later on, when they can probably better afford it. And that’s what might be really new in this budget. There might be something to wield out further down the road,” he said.

“I tend to believe there’s a little bit of gas in the tank, and there’s likely to be one show piece announcement in the budget. The hint is there. They’re talking about support for small businesses and manufacturers and reduced taxes for Canadians.”

Avery Shenfeld, chief economist at CIBC World Markets, said there could be “some room for measures that begin the following year, since revenues will be assumed to grow with a partial recovery in oil.”

Meanwhile, Mr. Oliver is mindful of the eurozone’s fraught outlook and slowdowns in China and India.

“The international economic recovery is fragile and Canada needs to remain fiscally strong,” Mr. Oliver said, adding that the eurozone economy continues to experience growth amid deflationary pressure.

As well, “key emerging economies . . . have lost momentum. Fortunately, the U.S. economic recovery is gathering steam,” he said. “But one country cannot carry the world. So, external risks are a continuing concern for Canada’s economic recovery.”

Wee bit of room for some more goodies