Nearly $8-billion in unexpected revenue, lower-than-expected costs for the Alberta floods, lower direct spending and an accounting change have all contributed to the federal government's significantly improved bottom line.
Finance Canada released additional details on Monday confirming last year's deficit was much smaller than the government had projected just eight months ago. The deficit came in at $5.2-billion rather than the $11.4-billion estimated earlier this year in the budget.
The Conservative government is keeping a tight grip on federal spending as it moves closer to balanced books, but the opposition says "stealth cuts" are at the root of Ottawa's shrinking deficit.
Direct program spending came in $2.8-billion lower than expected, marking the fourth year in a row that spending in that area has declined. The category excludes items such as provincial transfers and represents spending that is directly under the federal government's control.
Treasury Board President Tony Clement, who oversees how departments manage the various spending cuts and budget freezes that are part of the government's plan to eliminate the deficit, said the better bottom line comes from a culture change in the public service.
"The psychology of government in terms of seeking new funds has been broken," he said in an interview with The Globe and Mail.
Measured as a percentage of gross domestic product, overall federal spending has dropped from 17.7 per cent during the peak of stimulus spending in 2009-10 to 14.7 per cent last year, which is slightly smaller than the 15 per cent when Stephen Harper's government was first elected in 2006.
Opposition MPs say the government celebrates the lower spending but does not explain what has been cut. NDP MP Guy Caron said the Conservatives appear to be inflating their deficit estimates to make themselves look good later.
"This is nothing to be proud of," he said.
Liberal MP Scott Brison said more detail is needed on cuts and whether they are sustainable.
"Clearly, one-time asset sales and stealth cuts form a significant part of this adjustment, but again, the Conservatives aren't being open or transparent with the details," he said.
Monday's Finance Canada report indicates several factors contributed to the smaller deficit. One is an accounting change related to bond buybacks that means, for comparison purposes, the estimated deficit figure from the February budget is reduced to $15.9-billion from $16.6-billion. After that adjustment, the final deficit figure was $10.7-billion smaller than projected.
The main factor was $7.7-billion in unexpected revenue across all streams, including personal and corporate income tax, employment insurance premiums and $2.8-billion in "other revenues."
The report said the estimated federal liability under the Disaster Financial Assistance Arrangements for assistance related to the 2013 flood in Alberta was $1.2-billion lower than expected, "reflecting updated information from the province."
The report marks the second year in a row that the final deficit numbers came in significantly smaller than projected in the preceding budget. At this time last year, the government announced the 2012-13 deficit came in at $18.9-billion rather than $25.9-billion as projected in the 2013 budget.