BUDGET 2014: Feds give few details on plan for projected surplus

Mark Brownlee
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Federal finance minister Jim Flaherty presented a budget devoid of fancy spending programs on Tuesday, giving no indication of how the government plans to spend a surplus it is projecting for next year.

Federal Finance Minister Jim Flaherty.

The government promised millions of dollars in additional spending on new and existing programs – including everything from youth internships to research at Canadian universities – but gave no roadmap for what it will do with the $6.4-billion surplus it plans to have for the 2015-2016 fiscal year.

“Some people will say this is a boring budget,” said Mr. Flaherty, speaking to reporters on Tuesday afternoon. “I take that as a compliment.”

The National Capital Region has felt the pinch in recent years as the governing Conservatives have attempted to rein in the deficit by getting rid of employees in the federal civil service.

Tuesday’s budget did not specify any specific plans for what the government intends to do about the size of the public service in the future.

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However those who were hoping it would begin to map out plans to start pumping money back into the capital are going to be disappointed, said Ian Lee, a professor at Carleton University’s Sprott School of Business.

He said the budget document does nothing to change his opinion that the governing Conservatives won’t do anything radical with the surplus that is forecast for next year.

“I do not believe that they’re going to start going on a big hiring binge,” said Mr. Lee.

The government likely won’t announce any more significant job cuts, he said, but that doesn’t mean a surplus will lead to a rapid expansion in the ranks of the civil service.

“Anybody that thinks we’re going back to the old days – I don’t think so,” he said.

He said it is far more likely the government will use the surplus to decrease the amount of tax individuals and businesses have to pay.

Despite presenting few details about what he planned to do with the additional money, the budget confirmed Mr. Flaherty’s previously stated plan for growing the surplus into the next fiscal years.

The government is banking on the surplus increasing to $8.1 billion for fiscal 2016-17 and 2017-18. It is then forecasting that it will grow to $10.3 billion in 2018-19.

The budget document projects a deficit of $2.9 billion for fiscal 2014-15.

The budget also reiterated the government’s plan to freeze departmental operating budgets for the next two fiscal years, saving more than $1 billion.

“A return to surplus is not a licence to spend recklessly,” read remarks prepared for Mr. Flaherty’s budget speech on Tuesday.

“We will make sure Canada’s fiscal position remains strong, strong enough to weather any future economic storms,” he added. “That starts with paying down the debt.”

The budget contained relatively few answers on other questions swirling around the capital’s business community.

The document’s section on plans for celebrating the 150th anniversary of confederation in 2017 – a topic area that’s of considerable interest to the city’s tourism sector – did not make reference to what the government plans to do in the capital to mark the occasion.

Mayor Jim Watson has been pressing the government for answers on that front so the city can begin mapping out its plans.

Answers to those questions aren’t expected to emerge until next year’s budget, which the government is set to deliver sometime in the months before the next federal election.

Organizations: Conservatives, Carleton University, Sprott School of Business

Geographic location: National Capital Region, Canada

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Recent comments

  • Norman
    February 11, 2014 - 18:41

    "but gave no roadmap for what it will do with the $6.4-billion surplus it plans to have for the 2015-2016 fiscal year." As a "Business Journal" I am surprised you even bring this up. Typically when you have extra money it is used to reduce your outstanding debts. This applies to households as well as governments. The accumulated federal debt of hundreds of billions of dollars is costing us a small fortune in interest payments. It is obvious to me any extra budgetary savings should be directly applied to the federal debt. Maybe we shouldn't even have a federal debt.. especially a significantly large one.