With a multibillion-dollar surplus just around the corner, federal Finance Minister Joe Oliver suggests the spending tap is about to be slowly turned back on in Ottawa – just in time for a general election.
After years of austerity budgets under predecessor Jim Flaherty, when Prime Minister Stephen Harper’s government ran deficits in the wake of the 2008 recession, Mr. Oliver is now talking about “prudent spending,” paying down debt and trimming taxes.
Next year’s spending plan – Mr. Oliver’s first since taking over the Finance portfolio earlier this year after Mr. Flaherty stepped down – is expected to be the first surplus budget in seven years.
Kicking off a summer retreat at a quaint country resort in Wakefield, Que., not far from Parliament Hill, Mr. Oliver hinted Tuesday that the package would include income tax cuts and other tax reductions, thanks to an expected $6.5-billion surplus.
“I’m talking about reducing taxes for Canadian families and individuals, yes,” he said in response to a question about whether he plans to cut income taxes.
“We’ll also be able to look at individual areas where prudent spending will be appropriate, and of course reducing the debt is another issue we’re going to be examining.”
Ottawa recorded a $10.3-billion surplus in 2007 before the world economy turned Canada’s books red in the form of a $6.1-billion shortfall the following year.
In 2009, that deficit ballooned to a record $58.2-billion as the government tried to fuel job creation.
The annual summer economic retreat is billed as an opportunity for the Finance Minister to gather information in preparation for his fall economic update and the budget in the spring.
The two-day gathering saw a pared-down list of just 16 invited guests, including the heads of investment firms, big retailers and resource companies, economists and one newspaper columnist.
Many invitees were unavailable due to conflict schedules over the summer holidays, said Mr. Oliver, who dismissed suggestions that the guests might have been chosen on the basis of their political leanings.
Officials said the minister was seeking ideas on how to create more jobs, along with feedback on the government’s current fiscal plan.
Prior to the start of the meeting, Mr. Oliver said he’s not overly concerned about Canada’s ability to create jobs, noting that the improving U.S. economy is expected to help the job-creation effort north of the border.
Not long after Mr. Oliver’s remarks, Statistics Canada admitted Tuesday that it made a mistake in its most recent job numbers, which said just 200 new jobs were created in July, a figure well short of expert expectations.
The agency said a revised report would be issued Friday.
“Taking the very rare step of issuing a formal correction … suggests that this will not be a minor revision,” the Bank of Nova Scotia said in a note to its clients.
Mr. Oliver also said Tuesday that he saw no immediate concerns about a potential downward correction in Canada’s housing market.
“We’re monitoring the market carefully, but are not alarmed by what we see.”
When it comes to spending, Mr. Oliver said he’s prepared to sign more cheques for building and repairing roads and other infrastructure.
But he suggested that kind of spending would come slowly. And he sounded unenthusiastic about the Ontario government’s call to spend billions more on transit and other projects.
Ontario Premier Kathleen Wynne is urging the federal government to commit 2 per cent of Canada’s GDP to infrastructure projects across the country.
For Ontario alone, that would amount to $12-billion per year.
“We understand the importance of dealing with aging infrastructure,” Mr. Oliver said.
“When I heard from the premier of the province of Ontario that they wanted an additional $12-billion – which if you extrapolate that to the whole country is an additional $30-billion, driving us into a massive deficit – that’s not the way this government will go.”
Mr. Oliver did say the federal government would increase transfers to the provinces and territories for health care and other expenditures.