The federal government is on track to reap $71-billion in surpluses over the next six years, according to a new report from TD Economics.
The analysis is based on this week's confirmation by Finance Canada that last year's deficit was significantly smaller than projected. Prime Minister Stephen Harper said last week that he still expects to post a small deficit in the current 2014-15 fiscal year, but TD Economics disagrees.
The report released Tuesday forecasts a $5-billion surplus this year, followed by surpluses of $12-billion, $13.7-billion, $11.9-billion, $13.3-billion and $15.2-billion in the five following years through to 2019-20.
One key point however is that these projections are based on the status quo and do not take into account the likely possibility that the Conservative government will soon enact promised tax cuts that were mentioned in the 2011 platform and were contingent on a balanced budget.
Those promises include a "Family Tax Cut" that would allow couples with children under 18 to split their income for tax purposes. The Conservative platform estimated this would cost $2.5-billion per year in forgone revenue. The platform also promised tax credits related to fitness and a doubling of the amount that can be contributed each year into Tax-Free Savings Accounts.
According to TD Economics, the income-splitting pledge will cost $3-billion in 2015-16 and rise to $3.5-billion a year by 2019-20. Combined, TD said the already-promised measures from the Conservatives would absorb about one third of the available surplus room over the next five years.
Finance Minister Joe Oliver is expected to release a fall fiscal update in late October or early November that will show what the government is expecting in terms of surpluses over the coming years. The government has also hinted that the fall update could unveil details as to how the government will manage those surpluses.
Projections of government revenue will be closely watched over the coming year as they will guide the platforms of the various political parties as they craft proposals for the next federal election, scheduled for Oct. 19, 2015.
However the news in recent days shows such projections should be treated with caution. The Conservative government's 2014 budget was released in February, with just weeks to go before the end of the 2013-14 fiscal year. Yet even with such a tight time horizon, the projection for Ottawa's bottom line that year proved to be off by nearly $11-billion when the final, official figures were released Monday.