$1.9B surplus ends string of Tory deficits

Harper touts ‘incredibly good news,’ but economists downplay significance of budget numbers

OTTAWA— Stephen Harper took heart from the announcement that Ottawa ran an unexpected $1.9-billion budget surplus last year, a bit of long-awaited good news on the economic front for the Conservative leader in the election campaign.

The small surplus marked a reversal of the Conservatives’ prediction in April that the final numbers for last year would show a $2-billion deficit. And the result announced Monday put an end to con- secutive budget deficits by Conservative governments since 2008.

“This is incredibly good news. Look, in spite of all the problems of the world, this country has a balanced budget,” said Harper, who on Thursday will take part in a leaders debate on the economy.

“We are starting this year in an even better position than we thought we would,” he said Monday at an event in Kamloops, B.C.

The budget surplus was partly attributed to lower-than-expected public debt charges in 2014 because of lower interest rates and “lapsing” of government spending, a controversial trend that takes place when departments do not use all the money approved for the year. Direct spending on federal government programs decreased last year by $1.6 billion from the previous year, the finance department reported. With the federal government spending more than $280 billion annually, economists say it is of no major consequence if Ottawa records a small budget deficit such as the $5billion deficit the Conservatives re- ported in 2013 or the small $1.9-billion surplus from last year.

But whether Ottawa should run budget surpluses or deficits still looms as a political issue in the Oct. 19 election.

Both the NDP and Liberals have said the Conservatives made a bad economic situation worse this year by concentrating on cutting spending to balance the books when Ottawa could have engaged in a stimulus program to strengthen the economy.

Harper said the NDP and Liberals would spend beyond their means, damaging the country’s long-term economic prospects.

NDP Leader Thomas Mulcair said that, if elected, the NDP is determined to balance Ottawa’s books.

“Today’s numbers are good news for Canadians,” he said after making a health funding announcement in Vancouver. “It shows that the NDP is going to be starting off on the right foot by proposing to have a balanced budget.”

Liberal Leader Justin Trudeau says his party, if elected, would record a budget deficit for three years to pay for infrastructure spending and increased family-support programs.

Trudeau said the real budgetary concern is what he called a deficit in spending on transit, bridges and other infrastructure: “That’s what’s slowing down our growth.

“Mr. Harper worked hard to try and balance the budget last year in time for the election by cutting program spending to Canadians who need it — whether it’s our veterans, our seniors or First Nations,” Trudeau stated during a stop in Toronto.

Asked Monday if the practice of federal government departments not spending their full budgets, or “lapsing,” was a contributing factor in the economic decline in the first half of 2015, Harper said that suggestion was “absolutely absurd.

“We expect them (federal departments) to spend effectively,” he said.

And while the Conservatives have predicted a budget surplus of $1.4 billion in the current fiscal year, the parliamentary budget officer has said that Ottawa will record a $1-billion deficit in 2015.