The federal government is predicting a $3.7 billion budget surplus in 2015, Finance Minister Jim Flaherty announced Tuesday, which means the Conservatives could unveil a series of tax cuts to appeal to voters ahead of the next federal election.
Flaherty made the announcement as part of his fall economic update, which he delivered in Edmonton. The surplus was nearly $3 billion better than what was forecast in the spring budget.
“We are on track, as we planned to balance the budget by the 2015-16 fiscal year,” Flaherty told reporters. “More importantly perhaps we have a sustainable, long-term fiscal plan.”
Flaherty would not say when asked by reporters what the government plans to do with its surplus, saying such speculation would be akin to “putting the cart before the horse.”
“We have to take it one year at a time, be realistic, be prudent in what we do, be cautious,” Flaherty said. He did say, however, that he is “a big fan” of paying down the debt “because it’s important for the next generation of Canadians that we do not live off of them.”
The surplus can be attributed in part to the planned sell-off of General Motors shares and of Crown land in British Columbia – the Ridley coal terminal and the Dominion Coal Blocks, as well as efforts to curb spending across federal departments.
The government expects to achieve about $1.65 billion in savings from freezing department budgets in the next two years, and could make more than $2 billion from the sale of the GM shares and the Crown lands in B.C.
On the cost side of the ledger, the government is estimating a $2.8 billion commitment to Alberta flood relief.
Not included in the latest figures are what the government expects to rake in from a wireless spectrum auction in 2014. “So the surplus could be huge,” tweeted CTV’s Richard Madan.
NDP finance critic Peggy Nash told a news conference that the economic update is “nothing more than a public relations exercise.”
She told reporters Tuesday that the NDP would wait for independent experts to complete a “more accurate forecasting.”
Nash later told CTV’s Power Play that international analysis has concluded the Canadian economy is in fact underperforming.
“Growth has been less impressive…because they’ve been putting their feet on the brakes, cutting spending almost a percentage point lower GDP growth because of government cuts,” Nash said.
Conservative MP James Rajotte countered that while Canada is scaling down the stimulus spending needed to get through the recession, the government has continued to invest in key areas such as health care, and research and innovation.
“At the same time, we’re keeping taxes low,” he told Power Play. “It’s a very balanced approach.”
Liberal finance critic Scott Brison accused the federal government of having “a history of padding the books with asset sales to create illusory surpluses on the eve of an election.”
Flaherty did not directly respond to a question about whether the federal government would fulfill a campaign promise made ahead of the 2011 federal election to allow income splitting for couples with children under age 18. Some estimates peg the cost of such an initiative at $2.7 billion.
Flaherty said the projected deficit for the current fiscal year is $17.9 billion, about $1 billion lower than previously projected, and will fall to $5.5 billion in 2014-15.
At the end of his short, post-update news conference, Flaherty was asked if he plans to run in the 2015 federal election. “Yes,” he said. “I’ve got work to do.”
With files from The Canadian Press
