Finance Minister Joe Oliver will introduce balanced budget legislation that will include measures to prevent future governments from running a deficit, except in "extraordinary circumstances."
Oliver shared details of his upcoming budget on Wednesday at the Economic Club of Canada in Toronto, ahead of tabling it in the House of Commons on April 21.
"The proposed legislation would ensure that we fix deficits by restraining spending first," Oliver said. "The only acceptable deficit would be one that responds to a recession or to an extraordinary circumstance."
Oliver's bill would place heavy restrictions on deficit spending, with automatic operational and wage freezes set to be triggered as the deficit runs up.
The bill would also require the finance minister set out immediate, "concrete" timelines to remedy any budget shortfalls. Within 30 days of a published deficit, the finance minister would be required to present a plan to the House of Commons Committee of Finance to get the budget back in the black.
In addition, any deficit spending in excess of $3 billion that occurs in regular circumstances would trigger an automatic operational freeze, as well as a five per cent wage cut for all ministers and deputy ministers. The wage cut would be restored when the books are balanced again.
Ministers and deputy ministers would also see their salaries reduced by five per cent during periods of deficit spending when the circumstances are not deemed to be extraordinary.
"If there is a deficit they helped create, they would in effect be required to contribute to the government's plan to return to balanced budgets," Oliver said.
The bill would allow the majority Conservative government to fulfill several election promises ahead of an anticipated fall federal election, including its pledge to balance the budget.
Oliver's speech made no mention of an expected move to double the limit for tax-free savings accounts. However, a confidential letter from Oliver to his fellow caucus members obtained on Tuesday indicates those measures will likely to be part of the proposed budget.
Oliver used his speech to slam former Liberal prime minister Pierre Trudeau's financial record during his tenure in the 1970s. He then suggested a government under current Liberal Leader Justin Trudeau would bring back the same "tax-and-spend" approach to government.
"They need your money to pay for their schemes," Oliver said. "It is the '70s all over again."
He did not mention the New Democrat Party.
Trudeau hit back at the Conservatives in speaking to reporters at an event in Chicoutimi, Que. on Wednesday afternoon, criticizing them for their timing with an election on the horizon.
He said finds it "a bit ridiculous" that the Conservative government is introducing anti-deficit legislation after several years of running deficits themselves.
"It's a great example of how this government simply cannot be taken seriously," he said.
Some have already criticized the Conservative government for its dogged pursuit of a balanced budget.
Dennis Mitchell, executive vice-president and CIO of Sentry Investments, says a balanced budget sounds good "on the surface," but the proposed measures to keep it balanced could end up handcuffing future governments in times of crisis.
"Inevitably, extraordinary circumstances come up that you hadn't anticipated, and then what you've really done is tied your hands," Mitchell told BNN on Wednesday.
He adds that Ottawa will have an even tougher time recouping losses in the future with the lost revenue that results from raising the TFSA limit.
"It's probably likely to come back and hamstring you at a critical time," Mitchell said.
