The Hill Times with a starker forecast of the federal fiscal landscape. He predicted the government could come in with a forecast deficit of $1-billion if it loses up to $6-billion in revenue from the petroleum sector, which Mr. Laurin said is possible. “What are they looking at right now? They’re looking at something extremely volatile and they don’t know what to do. Six billion dollars is a big thing, especially when you have promised a return to budget balance in 2015-16. That’s a big chunk of money that could go either way,” Mr. Laurin said. The economists made the estimated forecasts in the wake of Finance Minister Joe Oliver’s (Eglinton-Lawrence, Ont.) announcement last week that the Conservatives have postponed the 2015 federal budget to April, as the government attempts to squeeze out more time before putting its commitments and forecasts to paper and table it in Parliament as the scheduled 2015 federal election nears. Both economists told The Hill Times even barely staying out of deficit, with a surplus so low it wouldn’t even count as a surplus, or a notional $1-billion in deficit as Mr. Laurin cited as a possibility, would require using up a $3-billion contingency fund the government set aside last year after two years of a severe program spending freeze and thousands of job cuts in the public service brought them closer to a forecast service timed with the 2015 election year. “According to the fiscal update, they would have had a $4.9-billion surplus, including the contingency amount, in 2015-16. With the impact on oil prices, we figure they’re going to lose about $4.5-billion of that, so they will be essentially balanced or just shy, just above being in a deficit position, without any contingency [remaining],” said Mr. Antunes. “The contingency is gone. It’s essentially gone as we speak. It’s already gone. There’s no more contingency; I guess it was there to cover, potentially, things like unexpected oil price movements, among others. It wasn’t I guess quite enough to cover this kind of drastic move. Of course no one was expecting this kind of move,” he said. When he announced the delay of the budget last Thursday, Mr. Oliver said the fiscal pressure would likely prevent the government from introducing any new spending measures, but he assured a Calgary Chamber of Commerce crowd the government would press ahead with a controversial retroactive income-splitting tax plan for families with children under age 18 that the government forecasts will cost federal coffers $2.4-billion in the 2014-15 fiscal year and $1.9-billion in the 2015-16 fiscal year. Mr. Oliver said the government also intends to press on with a suite of tax breaks and expansion of universal child benefit payments, forecast to cost $7.6-billion over the same two fiscal years, despite the fiscal straight jacket from plunging oil prices. A reduction in employment insurance premiums aimed at helping small business would cost another $500-million. The opposition parties have accused the government of using the family tax cut and its significant expansion of the child tax benefit—including a hike of payments for each child under age six to $160 per month from $100 and expanding the program to include a payment of $60 per month for each child or teenager aged six through 17—as blatant pre-election attempt to curry voter support. But the two economists suggest that if the government goes ahead with the generous increases to taxable payments of the child benefit and other tax credits to all families, its fiscal planning over the next year could be even more difficult. “Because of our fiscal discipline, were now able to deliver even more tax relief for hard-working Canadian families,” Mr. Oliver said in his Calgary speech. “Were proposing to increase and expand the universal childcare benefit, introduce the family tax cut, and raise the childcare expense deduction dollar limits,” he said. “The government will not raise taxes or engage in reckless new spending that could endanger our economic recovery or jeopardize our fiscal situation.” In his speech, Mr. Oliver also said that “there is no consensus about how low oil prices will fall or how long they will stay” at $45 US per barrel.
Posted on: Wed, 21 Jan 2015 22:33:13 +0000
Trending Topics
Recently Viewed Topics
© 2015