Federal Budget 2014 - Following Through: No Surprises Federal Budget Moves to Surplus

  • February 12, 2014
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Getting back to surplus remains the cornerstone of federal budgeting. With the deficit having swelled to more than $55 billion in the aftermath of the 2008-09 Great Recession and Financial Crisis, Finance Minister Jim Flaherty delivered a budget that has the government on the cusp of returning to the black. This is an admirable accomplishment, one achieved without any significant tax increases and involving a hefty dollop of restraint after spending had been ramped up during and after the recession.

Getting back to surplus remains the cornerstone of federal budgeting. With the deficit having swelled to more than $55 billion in the aftermath of the 2008-09 Great Recession and Financial Crisis, Finance Minister Jim Flaherty delivered a budget that has the government on the cusp of returning to the black. This is an admirable accomplishment, one achieved without any significant tax increases and involving a hefty dollop of restraint after spending had been ramped up during and after the recession.

Highlights

  • Budget 2014 confirms that the federal government is on course to return to surplus position in 2015-2016. The deficit for the coming fiscal year is projected to be a slim $2.9 billion. But it’s quite likely the deficit will be eliminated in 2014-15.
  • The move back to surplus is achieved mostly through tight expenditure management, with a two year spending freeze for all departments, a deferral of defence procurement, and reforms to public sector benefit programs.
  • The only notable tax change in Budget 2014 is higher taxes on tobacco.
  • Asset sales are also part of the balancing equation and are expected to add $500 million this fiscal year and $1.5 billion in 2015-16.
  • The economic assumptions underpinning the Budget foresee the Canadian economy growing by 2.3% (in real terms) this year and by 2.5% in 2015, in line with private sector projections.
  • Spending priorities are in the areas of labour market development and skills training as well as innovation and some funding for infrastructure.