The Globe and Mail is hosting a debate on the economy among the leaders of the three main political parties on Thursday at 8 pm (ET). Click here for more details.
Stephen Harper is returning to more comfortable political terrain this week, buoyed by the news that his Conservative government balanced the books a year ahead of schedule.
The government recorded a $1.9-billion surplus for the 2014-15 fiscal year that ended March 31, according to the official year-end numbers published Monday by Finance Canada. The government had been projecting a small deficit for that year as recently as late May. The department said higher than expected tax revenue, along with lower spending and debt costs led to year-end adjustments that put the numbers into the black.
The release, which comes earlier in the year than usual, provides Mr. Harper with some positive news ahead of Thursday’s English-language debate on the economy, which will be hosted by The Globe and Mail in Calgary.
Campaigning in Kamloops, B.C., on Monday, Mr. Harper seemed pleased to be talking about fiscal issues after days of being on the defensive over his government’s approach to refugee policy. The Conservative Leader used the figures to attack the policies proposed by the Liberals and NDP.
“Tax hikes do not balance budgets,” he said. “Tax hikes kill jobs.”
The release of the 2014-15 figures marks the end of deficit spending first approved in the 2009 budget as a response to the global financial crisis. The six years of gradually shrinking deficits added more than $150-billion to the national debt. However, Canada’s debt load as a share of the economy remains low by international standards and is lower than when the Conservatives came to power in 2006.
The Globe and Mail reported last month that Finance Minister Joe Oliver gave the department permission to publish the figures during the election campaign. They are normally released in October or late September. The department followed a similar practice during the 2008 election, which also overlapped with this reporting period.
Monday’s report shows the federal debt as a percentage of gross domestic product dropped to 31 per cent in 2014-15, down from 32.3 per cent the year before. The report says it is now at less than half of its post-Second World War peak of 67.1 per cent in 1996, when Canada faced concerns that it had hit a debt wall.
The provincial picture is less rosy, however, as Monday’s report shows the provinces face a debt load that is nearly on par with the levels faced in the late 1990s.
The report provides fresh data for all parties to point to as they debate the merits of balanced budgets and the role Ottawa should play in helping the provinces in areas like health-care spending, infrastructure and government pension plans.
While Mr. Harper is promising more balanced budgets and to keep taxes low, the two main opposition parties are divided over whether to balance the books. NDP Leader Thomas Mulcair said Monday’s report is “good news for Canadians” and he portrayed it as evidence that his party can in fact balance the books while delivering on promises to boost spending on day care, health care and infrastructure.
The NDP is expected to release a detailed costing of its promises on Wednesday that will also show how it intends to pay for its pledges, including the size and timing of a hike to the corporate tax rate. The document will not be a full party platform.
“As good, prudent public administrators, you don’t add tens of billions of debt on the backs of future generations during an election campaign. Justin Trudeau’s short-term thinking is a thing of the past as far as we’re concerned,” said Mr. Mulcair, taking a jab at the Liberal Leader who is competing with the NDP to win over Canadians who are looking for a change in government.
Mr. Trudeau is promising a 10-year, $60-billion infrastructure spending plan, which he plans to pay for by running three years of deficits before balancing the books.
In response to Monday’s figures, Mr. Trudeau accused the government of making painful cuts to spending last year in order to reach the political target of balancing the books. He said this approach contributed to the technical recession that was reported in the first half of 2015 and he argued that this year’s figures are on track to fall back into deficit, citing a report from the Parliamentary Budget Office.
“Mr. Harper worked hard to try to balance the budget last year in time for the election by cutting program spending to Canadians who need it, whether it’s our veterans, our seniors, or First Nations or help for [Citizenship and Immigration] to bring in immigrants and refugees,” he said. “But of the different deficits out there, the fiscal deficit isn’t the one that concerns Canadians, and certainly doesn’t concern economists all that much. It is the infrastructure deficit that is so concerning to so many people. That’s what’s slowing down our growth.”
The Conservatives initially promised in the 2011 election campaign that they would return to surplus in 2014-15, but later pushed that target back to 2015-16.Report Typo/Error