Week four of this 78-day election campaign focused on the economy, with the federal leaders sparring over how to best manage Canada’s financial books and deal with a volatile global market.
But as the opposition leaders accuse the Harper government of being in deficit, new numbers show that the federal treasury posted $5 billion surplus for the first three months of the fiscal year. That’s up from $424-million during the same period in the previous year.
Friday’s report from Finance Canada shows that the government ran a $1.1-billion surplus in June, half a billion less than the same month last year when the surplus was $1.6 billion.
The Conservatives touted the surplus Friday, in an attempt to bite back at the NDP and Liberal Party’s recent claims that the country is now in deficit.
But earlier this week, Macdonald-Laurier Institute Senior Fellow Philip Cross told CTV’s Power Play that a deficit “can’t be avoided” if the global economy continues to perform poorly, no matter how hard the government tries to avoid it:
‘Made in Canada recession’
Experts agree that now may not be the right time for the government to balance the books given the current economic climate.
Former chief statistician of Canada Munir Sheikh told CTV’s Power Play on Thursday that the country is headed into a “made in Canada recession,” and that the best thing for the economy right now is to run a deficit.
“The choice for you (as a leader) is whether that money should be borrowed by governments to do useful things or should that money flow to households,” said Sheikh. “I think a senseful thing to do is for the government to be doing useful things in bad economic times.”
While Harper and NDP Leader Tom Mulcair have committed to balancing the budget next year, Liberal Leader Justin Trudeau said he would run modest, short-term deficits until 2019 in order to boost the economy.
Former parliamentary budget officer Kevin Page said balancing the books may be unrealistic for the current Canadian economy, which has seen five consecutive months of decline. “Does it make sense to cut back on government spending in this environment to get to budgetary balance? I don’t think it does. I think it’s very normal when we have a recession to run deficits.”
Majority of Canadians support deficit: poll
A Nanos Research poll from earlier this week found that 79 per cent of Canadians agree that the country feels like it is in recession, and more than two thirds (69 per cent) of respondents said “it’s time for a change” in government.
The same poll found that a majority of Canadians -- 54 per cent – support deficit spending, while 36 per cent oppose it and 10 per cent said they were unsure.
Global worries driving Canadian fears
TD Bank’s Deputy Chief Economist Derek Burleton told CTV’s Power Play on Monday that unlike the 2008 financial crisis, the recent economic woes stem from China and other emerging markets.
But Burleton said Canadians don’t need worrying yet, since the U.S. market is relatively stable.
“My view is the U.S., doing quite well, is going to provide some benefit to the Canadian economy in general.”
