OTTAWA – The Conservatives much ballyhooed surplus announced earlier in their budget is turning into a big fat $1 billion deficit.
New projections by the parliamentary budget officer suggest the federal government’s budget won’t be balanced this year, despite the Conservatives’ promise to have no deficit in 2015.
The budget officer released the report last week, following a July 16 request from the Liberals and July 18 request by the New Democrats. The parties made the requests based on a decline in real GDP in the first quarter of 2015, which results in lower corporate tax revenue and HST for the federal government.
The government had projected a slim, $1.4 billion surplus for 2015 in its budget, which was presented last April.
The PBO estimates a budget outlook updated with the lower GDP numbers alone would show a $1.5-billion deficit at the end of this year and a $0.1 billion, or $100 million, deficit in 2016-17. Canada would be back at a $1.5 billion surplus in 2017-18, according to the PBO projection.
But that’s not the whole picture: weak GDP growth, the budget office says, would be partially offset by higher inflation and lower interest rates. Once those are taken into account, the projected deficit is $1 billion this year, with a small surplus of $0.6 billion, or $600 million, in 2016-17, and $2.2 billion in 2017-18.
The PBO projection came about an hour after Finance Canada said the federal government posted a $3.9 billion surplus for the first two months of the 2015-16 fiscal year. Those numbers include the estimated $3.4 billion of General Motors shares the government sold and, because they cover April and May, exclude the $3 billion in universal child care benefit cheques delivered this week.
NDP Leader Tom Mulcair noted the balanced budget was supposed to be the Conservatives’ hallmark brand.
Liberal finance critic Scott Brison said the government’s failure to balance the books is another broken promise to Canadians.
“Their economic record is in tatters,” Brison said.
“They’re using deficit financing for key election giveaways, including income splitting, which will benefit wealthy Canadians disproportionately.”
