OTTAWA – Finance Minister Joe Oliver says the federal government could have more than $9 billion in surplus to play with next year, but Canadians shouldn’t expect any massive new spending programs.
“We don’t intend to launch a massive, reckless spending program because we’ve spent too much time and devoted too much work in reducing the deficit and eliminating it to throw it all away,” he told reporters at a media event.
“Deficit spending over the longer term is a path to economic decline and we’re not going in that reduction.”
Oliver said he still plans to reduce taxes once the deficit is eliminated in the 2015-16 budget, which will likely come next winter, but Wednesday’s statement also suggests he will be cautious about how deep the cuts will be — at least initially — so as to not jeopardize the surplus.
It was also unusual for the finance minister to include the $3-billion security blanket predecessor Jim Flaherty had inserted into his calculation in recent years of the room the government had to increase spending or cut taxes. The March budget estimated the 2015-16 surplus at $6.4 billion, but Oliver is also including the contingency fund to arrive at $9 billion.
That still may be modest. Earlier this week, the Parliamentary Budget Officer estimated the 2015 fiscal year surplus could result in a $7.8-billion surplus, which once the contingency fund is piled on, would produce close to $11 billion in fiscal room for Oliver to use in tax cuts, spending or debt reduction.
With an election scheduled for October of that year, the Harper government is counting on a sizable surplus in order to make good its 2011 promise to introduce income splitting for families — or another such scheme — prior to the campaign. Analysts have estimated the program would cost about $2.7 billion as originally designed, with up to $50,000 of income transferable between couples in order to reduce the tax bite on the higher earner.
The government had also pledged to introduce other less-costly goodies once the budget is balanced, such as doubling the savings limit on tax free savings accounts, as well as doubling the child fitness tax credit and creating a new credit for adult fitness activities.
Oliver said it was important to remain in surplus once it is achieved because it will reduce interest payments on the debt, which can then be used to pay for social programs.
He steered clear of commenting on the upcoming Ontario government budget, which is believed will include new spending and a tax hike on incomes above $150,000, but said it was important for provinces to follow Ottawa’s lead on reducing deficits.
As expected, Oliver said he intends to proceed with his predecessor’s proposal on establishing a new national securities regulator, saying he intends to table draft legislation “fairly soon.”
Only Ontario and British Columbia have so far publicly signed on to the federal plan, but the minister said there has been progress behind the scenes. There is little prospect of the two major holdouts, Quebec and Alberta, opting in, however.
Oliver said the new regulatory body will be voluntary and the intention is that it will establish a co-operative arrangement with holdout provinces.
Still, he urged all provinces to join the new arrangement.
“Every single developed country in the world has a (national) regulator, with the exception of Canada,” he said. “In my many decades as an investment banker and a securities regulator (heading the Ontario Securities Commission) I’ve seen the inefficiency that results from a decentralized system of 13 provincial and territorial securities commissions and we believe there’s a better way to go.”
In 2012, the Supreme Court shot down Flaherty’s draft bill on a national regulator while still leaving the door open for Ottawa to limit the scope of the office, or obtain provincial buy-ins.