FEDERAL SURPLUS IGNITES DEBATE
Campaign boost for Tories
OTTAWA — The federal government’s surprise $1.9-billion surplus in 2014-15 was a welcome boost to Stephen Harper’s Conservatives on the campaign trail Monday, even as his foes accused the Tories of driving Canada into recession by balancing the books through billions in cuts.
As the focus on the economy intensifies during the federal election — with a leaders’ debate on the economy Thursday in Calgary — the three main national parties swiftly put their own spin on the numbers released Monday in the federal government’s annual financial report.
After a string of six consecutive deficits, federal finances are back in the black a year ahead of schedule. The government posted better-than-expected financial results for the 2014-15 fiscal year that ended in March, with the $1.9-billion surplus well ahead of the $2-billion deficit the government had forecast for the year in last April’s budget.
Harper said the surplus for 2014-15 and strong firstquarter numbers for the 2015-16 year suggest another balanced budget is in the works for this year.
“I see zero to little risk that we will have anything other than a surplus for the second year in a row based on the trajectory we are on,” he said Monday at an event in Kamloops, B.C.
The Conservatives have been forecasting a $1.4-billion surplus for the current 2015-16 fiscal year, but that balanced-budget projection had been in doubt because of a sluggish economy and stubbornly low oil prices that are eroding government revenues.
Statistics Canada data from earlier this month showed the economy in recession in the first half of the year. As well, a recent report from the parliamentary budget officer had said the federal government will run a $1-billion deficit in the current fiscal year.
What it means for the Conservatives
The Conservatives are using the new report to sell the message that they are the only party that can be trusted to manage Canada’s fragile economy.
The government recently announced a $5-billion surplus for the first three months of the 2015-16 fiscal year (April to June), although about $2.1 billion of that came from the government’s one-time sale of its remaining shares in General Motors.
Harper defended his government’s record, while his political opponents said the balanced budget was the result of billions of dollars in cuts or program expenditures going unspent — known as “lapsed spending” — that they argued actually sank Canada into recession.
“That’s absolutely absurd,” Harper said. “The reason we have a surplus is actually the revenues are up, that is the principal reason.”
What it means for the NDP
NDP Leader Tom Mulcair said the balanced budget bodes well for his party’s spending plan in the coming years, which his opponents have called unaffordable.
Mulcair, who has promised an NDP government’s first budget would be balanced, said the better-thanexpected financial picture provides a “solid fiscal foundation” to build important multibillion dollar programs of the sort the NDP has been pledging.
“Today’s numbers are good news for Canadians and it shows that the NDP is going to be starting off on the right foot, by proposing to have a balanced budget, talking to Canadians about what we can accomplish together in health care, quality, affordable $15-a-day child care,” Mulcair said at a campaign event in Vancouver.
What it means for the Liberals
Meanwhile, the surplus sharpened the spotlight on Liberal leader Justin Trudeau’s promise to run deficits of up to $10 billion a year over three years to spur the economy.
Trudeau said the surplus was achieved on the backs of Canadians as the government cut or “lapsed” billions of dollars in approved expenditures on important programs, which he said contributed to the economy sinking into recession in the first half of the year.
Despite the surplus, Trudeau said Monday a Liberal government would still proceed with its three-year deficit plan to invest in infrastructure, and would not post a surplus until 2019.
“We know and we saw Mr. Harper under-spending and making cuts to veterans affairs, to aboriginal affairs, to seniors in the billions of dollars so he could balance the books in time for his election.”
What the numbers say:
Government revenues in 2014-15 were $3 billion higher than projected, largely from higher-than-expected gains in personal and corporate income taxes. Also, direct program spending was $1.5 billion less than forecast, “attributed in part to a higher-than-expected lapse of departmental spending authorities,” the report says.
It’s the first surplus since the 2007-08 fiscal year, just prior to the global economic and financial crisis. Between 2008-09 and 2013-14, the Conservatives accumulated more than $144 billion in deficits.