Oliver spends slim budget surplus
Sets aside new funds over the next few years for national security, municipal infrastructure
With just six months before the next election, Prime Minister Stephen Harper’s governing Conservatives have introduced a budget that offers attractive tax breaks for targeted voters and puts the country’s finances back into a precariously small surplus.
The economic blueprint introduced Tuesday by Finance Minister Joe Oliver also sets aside new money over the next few years for enhanced national security, including money for the Canadian Forces, and municipal infrastructure projects such as public transit.
But with little money in the kitty — this year’s surplus will be just $1.4 billion and won’t grow rapidly in future years — much of the big-ticket funding promised by Oliver wouldn’t be delivered until midway, or even near the end, of another presumed Conservative mandate.
The government said there will be a $2 billion deficit for 2014-15, and that it will gradually rise into a surplus: $1.4 billion in 2015-16; $1.7 billion in 2016-17; $2.6 billion in 2017-18; $2.6 billion in 2018-19; and $4.8 billion in 2019-20.
The government’s ability to post a surplus this year was aided by the fact that instead of setting aside the usual $3 billion reserve fund, it is now only setting aside $1 billion as a contingency.
In a speech to the House of Commons, Oliver said the surplus will put Canada on a more solid footing.
But the Tories are also keen to draw voters’ attention to the money that is being spent.
With an eye on securing the votes of families and seniors, the Conservatives are moving quickly to deliver specific tax breaks in a range of areas. Among the announcements:
Canadians will be able to put more money — $10,000 a year — in tax-free savings accounts.
Seniors will benefit from relaxed rules about their RRIFs.
Compassionate care benefits for those looking after a gravely ill family member will be extended from six weeks to six months.
Seniors and people with disabilities will be able to claim a new tax credit for renovations that make homes more accessible, such as ramps and walk-in bathtubs.
As previously announced, parents with children under 18 can split their income for tax purposes, and the government will provide regular childcare benefits for families.
Oliver emphasized how his government is taking measures to help families, seniors and caregivers.
“Helping families now is vital,” Oliver said.
“But just as important is helping them plan for a secure future.”
The government’s decision to double the contribution limit to TFSAs — first promised in the 2011 election — has been criticized as a measure that will disproportionally benefit wealthy Canadians.
But Oliver denied the charge, saying his move will further assist Canadians saving to buy their first home, start a business, or save money for their kids’ education.
Oliver’s budget was his first since he took over the finance portfolio last year, and it comes at a time of economic uncertainty.
Plummeting oil prices have hammered the economy — real growth in gross domestic product is forecast at two per cent in 2015 — and have led to lower tax revenues.
The budget was postponed until Tuesday so Oliver could grapple with those problems and figure out how to meet two objectives: reach a fiscal surplus after seven straight years of deficits, and find enough money to sprinkle around in future years.
Oliver said the Tories have got government finances back in the black after years of prudent controls on spending. “This did not just happen. It took hard work, unwavering focus and firm resolve.”
Oliver said it is important for the treasury to stay in the black — insisting a balanced budget is the “only way” to ensure long-term prosperity for Canadians and for the government to offer future tax cuts and investment in health care and education.
However, the budget shows the treasury will not be awash in funds — thanks, in part to the billions of dollars the Tories have committed to tax breaks for families.
The relatively low projected surpluses help explain why Oliver is being cautious with some of his future spending allocations.
For instance, the government is boasting of a new Public Transit Fund that will eventually give money to municipalities for infrastructure if they also provide funds and get money from the private sector.
But the first federal allocation, $250 million, won’t be provided unti l2017-18 and would then increase to $500 million in 2018-19 and $1 billion permanently in 2019-20.
Apart from deficit reduction and tax breaks, another main theme of the budget was security. In recent months, the government has put the terrorism issue at the forefront of its political agenda: Sending troops to fight the Islamic State of Iraq and the Levant in Iraq and Syria, and introducing a controversial anti-terror bill that gives new powers to the country’s police and security agency.
The budget sets aside new funds for the Royal Canadian Mounted Police, the Canadian Security Intelligence Service and the Security Intelligence Review Committee.
In the wake of last fall’s attack by a gunman on Parliament Hill, the budget sets aside $60.4 million for security on the Hill and $27 million for security at federal courthouses and registry offices, as well as the Supreme Court of Canada.