The Conservative government will deliver an earlier-than-normal February budget in an effort to recapture the policy agenda and set the stage for a good-news pre-election budget in 2015.
Finance Minister Jim Flaherty announced Monday afternoon that he will deliver his 2014 budget on Tuesday, Feb. 11, as he continued to play down expectations that it will include major new spending or tax cuts. The timing means the budget will be tabled during the Sochi Olympic Games, leading to opposition criticism that the Conservatives are trying to hide a “do-nothing” budget.
Conservatives stress that a low-key budget this year helps the government move toward its primary political goal, which is to announce a surplus for 2015 that is big enough to accommodate new spending and tax cuts ahead of the next election.
“There will be room for more money in the Government of Canada in the next several years because we’ve been careful,” Mr. Flaherty told reporters earlier in the day Monday. “We’ll have room to move on various issues.”
The Finance Minister repeated his claim that there is “no doubt” the budget will return to balance in the 2015-16 fiscal year and declined to answer when asked whether a surplus might appear one year early. Some private-sector economists have said that a balanced budget in 2014-15 is possible, depending on how the economy performs.
Over the past year, the Conservative government has made several attempts to reset its agenda and move attention away from the continuing Senate scandal. Moves such as a cabinet shuffle last July, a Throne Speech in October and a major trade deal with the European Union all failed to divert the public’s attention.
Former Conservative chief of staff Michele Austin, now a senior adviser with Summa Strategies, said the government’s fall agenda was essentially lost underneath the Senate scandal and an early budget lets ministers move ahead on their files instead of holding tight during a long prebudget period.
“It’s an opportunity to just get going early out of the gate and set the tone,” she said. “I’m not convinced that the Olympics has a lot to do with it … This is a bridge budget. It’s taking people to a surplus budget.”
Ms. Austin said an early budget gives people both inside and outside government extra time to think about priorities for 2015 and also allows for the possibility of announcing an earlier-than-expected surplus later this year if federal finances improve.
Pollster Bruce Anderson, chairman of Abacus Data, takes a similar view.
“For the Conservatives, there’s little point in taking time and creating suspense about this budget,” he said, adding that the sooner the 2014 budget is tabled, the sooner they can start talking about the surplus coming in the 2015 budget.
The opposition NDP and Liberals said Mr. Flaherty’s budget timing is a cynical move.
“What we’re dealing with here is smoke and mirrors,” said NDP Leader Thomas Mulcair. “They’re going to have a do-nothing budget right in the middle of the Olympics and hope that nobody pays attention to it.”
Liberal Leader Justin Trudeau said it looks like the the Conservatives are setting the stage to “look as great as they possibly can” in the run-up to the 2015 election.
“The problem for them is that Canadians are starting to realize that their reputation as competent fiscal managers is evaporating rapidly,” he said.
The government has a handful of tax-cut promises left over from the 2011 election campaign that are dependent on first balancing the budget. Those promises include a new adult fitness-tax credit, doubling the size of tax-free savings accounts and allowing income-splitting for families with dependent children.
The budget will update Ottawa’s forecast for government revenues and expenses. Mr. Flaherty’s most recent fiscal update – which was released in November – estimated a $17.9-billion deficit during the current 2013-14 fiscal year, followed by a $5.5-billion deficit in 2014-15 and a $3.7-billion surplus in 2015-16.
Conference Board of Canada chief economist Glen Hodgson, who was among the economists in Monday’s meeting with Mr. Flaherty, said the government needs to start thinking about longer-term measures, such as infrastructure spending, that promote economic growth.
“The challenge is when are we going to switch gears from a stabilization budget plan to a growth budget plan?” he asked. “At some point, we have to start investing in growth.”
Mr. Flaherty has been battling a rare skin disease. In a response to a reporter’s question about his health, Mr. Flaherty said he’s doing “much better.”