If Canada’s Projected 2 Percent Growth Drops, Conservatives Current Balanced Budget Would Quickly Become A Deficit!
Without using Canada’s rainy-day funds (Contingency), the Conservatives would still be in deficit for 2015-16. It’s also clear how fragile the surplus is: a one-year, one percentage point decrease in the expected 2 per cent growth rate would drop the federal government back into deficit.
OTTAWA – The Conservatives much delayed budget designed for the upcoming federal election dug into contingency funds to give Stephen Harper a balanced budget under new Finance Minister Joe Oliver.
Returning to keep the Conservatives’ 2011 election promise to return Canada to a surplus in 2015 with a federal budget that has the government spending $1.4 billion less than it takes in – despite a spate of pre-election tax cuts announced last fall.
But the slim surpluses for this year and the next three years were bolstered by setting aside a smaller contingency fund than they planned just a few months ago in the fall economic update. Savings from public sector negotiations that haven’t yet taken place also helped put the budget barely into the black, reported CBC News.
Without shrinking those rainy-day funds, the Conservatives would still be in deficit for 2015-16 and would be projecting a tiny $0.9 billion surplus in 2016-17.
It’s also clear how fragile the surplus is: a one-year, one percentage point decrease in the expected 2 per cent growth rate would drop the federal government back into deficit.
Oliver, however still found room for targeted tax measures to dress up a budget his party will take into the next election:
The annual contribution limit for tax-free savings accounts rises to $10,000 from $5,500, effective immediately.
Seniors at age 71 can leave more money in their tax-sheltered Registered Retirement Income Funds each year to help their savings last longer.
*EI benefits to care for a sick or dying relative extended to 6 months from current 6 weeks.
* A new home accessibility tax credit for to renovate homes to make them more accessible for seniors and people with disabilities.
* Small businesses earning less than half a million dollars will see their tax rate cut to 9 per cent from 11 per cent by 2019.
* Industry will see the accelerated capital cost allowance for new equipment extended 10 years.
*Changes to student grant and loan programs to ease eligibility for short-term students and working students.
Oliver said oil prices plunged so far last year that they aren’t likely to plunge again. He also found reassurance in the growth projections of private-sector economists and Bank of Canada Governor Stephen Poloz.
The Conservatives are also promising to increase the spending escalator for National Defence from an annual 1.5 per cent increase to an annual three per cent increase, although the department has returned billions in unspent funds in recent years.
The Canadian Centre for Policy Alternatives (CCPA) said the federal budget will do little to revitalize Canada’s sluggish job market and slow economic growth due to collapsing corporate investment in the tar sands.
“The federal government could be proactive to mitigate Canada’s fragile economy, but has chosen to create budget surpluses instead of jobs,” says CCPA Senior Economist David Macdonald. “In order to boost the economy and create jobs, we need a real commitment to infrastructure today, not in five years time.”
