Finance Minister Joe Oliver says the federal government will achieve a balanced budget in 2015 and could even post a small surplus, despite plummeting oil prices hammering Alberta’s economy.
Oliver made the announcement in a brief statement to reporters Wednesday following a pre-budget consultation.
Despite the ongoing slump in oil prices, Oliver maintained his government’s promise of balanced books this year, and projected a small surplus of $1.6 billion.
“That projection takes into account falling oil prices,” Oliver said. “There’s been much debate about the effect falling oil prices have on the government’s plan to balance the budget.”
Oil closed up slightly Wednesday at US$48.48 a barrel.
The Liberals slammed Oliver’s comments Wednesday as nothing but a “pre-election scam.”
Liberal finance critic Scott Brison told CTVNews.ca that unless Oliver is “using some form of new math,” there’s no way that the federal budget will be balanced in 2015-16.
Brison said the Conservatives are just trying to justify their “pre-election spending spree,” which includes income-splitting.
Banks and think tanks have issued warnings in recent weeks about the potential impact of falling oil prices on government coffers.
A recent CIBC report said the federal and provincial governments stand to lose $13 billion on oil’s decline, while the Conference Board of Canada predicted that Alberta is “very likely” headed for a recession, even if oil rebounds to $65 a barrel.
In his remarks on Wednesday, Oliver noted that plummeting oil prices can have both positive and negative implications. Consumers pay less for gas, and energy costs for manufacturing and transportation companies decline, which can make them more competitive, he said.
However, as oil company profits fall, so to do royalty payments to the provinces, he said.
“This will adversely affect our fiscal situation,” Oliver said.
Despite this, the federal government has no intention to raise taxes, he said.
Asked by a reporter whether the government will have to cut program spending, Oliver responded:
“The commitments that we have made, we’ll honour.”
