Prime Minister Stephen Harper said Thursday next week's federal budget will hold the line on spending and slash Ottawa’s deficit by another 25 per cent without “job-killing’’ tax increases.
Speaking at a business gathering near Toronto, Mr. Harper also sought to blunt concerns among cash-strapped provincial premiers, saying Ottawa would not reduce the amount of money granted to provinces for health care and education through federal transfers, even as it continues to cut its own substantial budget shortfall.
“The spending control is real. Program spending this coming year is essentially flat,” Mr. Harper said. “Now let me assure you, this will not be on the backs of pensioners, nor need the provinces fear a shrinkage of federal transfers for health care or education.”
With a major national accord on health funding – which sucks up more than 40 per cent of provincial budgets – set to expire in 2014, provinces have been looking for some certainty that Ottawa might be willing to do more to help them manage a system they say is busting at the seams. The Harper government, however, seems unlikely to be able to offer much more aid than the current 6-per-cent annual increase in health transfers, given its central priority of eliminating the federal deficit by 2015-16.
On Thursday, Mr. Harper said the budget, which could trigger a standoff with opposition parties and spark an election campaign, will show the deficit has shrunk by roughly one-quarter over the past year and he expects the gap will shrink by the same amount in the fiscal year to come.
Finance Minister Jim Flaherty and most private-sector economists have said the deficit for the year that ends on March 31 is likely to come in lower than the $45.4-billion projected last fall, thanks to faster-than-expected economic growth and the higher revenues that come with it.
That faster track should give the Conservatives enough flexibility to appease the New Democratic Party in an attempt to avoid an election. At the same time, it is also allowing Mr. Harper to dust off targeted promises aimed at solidifying Conservative support among families.
The Prime Minister said Thursday the budget won’t include big new spending initiatives, such as funding for professional sports arenas or stadiums, but it will fulfill a 2008 campaign promise to offer a tax credit for parents who enroll their kids in arts programs, similar to the break already on the books for children’s fitness.
Mr. Harper also reiterated, to nobody’s surprise, that the budget will reject opposition calls for a roll-back of the last phase of corporate tax cuts and that hiking the goods and services tax is a non-starter.
“There will be in fact much in that budget that the opposition can and should support,” Mr. Harper said. “However, we have been very clear with them for some time that there will not be job-killing tax increases in this budget.”
Liberal Finance Critic Scott Brison recently told The Globe an in interview that the corporate tax cuts aren’t affordable, linking them to the provinces’ funding shortfalls on health care and calling them fiscally as well socially irresponsible.