Flaherty signals a cut in program spending to reduce budget
The Finance minister also mentioned renewing the country's infrastructure, expanding trade relationships beyond the U.S. and small business tax breaks.
TORONTO—Canadians shouldn’t expect any “risky new spending schemes” or tax increases in the next federal budget, as the Conservatives push ahead with plans to balance the budget by 2015, Finance Minister Jim Flaherty said.
Flaherty, speaking to a business audience, said the government plans to get back to a balanced budget “during the current parliamentary term and certainly before the next election.”
He said the government will not reduce transfers to provinces and territories for education and healthcare that makes up about one-third of the budget. Nor will the government touch spending to individuals like seniors, people with disabilities and children, another third of the budget, he added.
So, Flaherty said, the government is left to focus on the final third of the budget—program spending.
The government’s latest deficit projections, released last week, show a deficit of $26 billion—up $5 billion from the budget forecast last March, due to global economic weakness that has cut into commodity prices and tax revenues.
The gloomy numbers prompted Ottawa to delay its hopes of balancing the books until 2016-2017, a year later than previously forecast, however both Flaherty and Prime Minister Stephen Harper have insisted the government can still balance the budget by 2015.
Budget consultations, Flaherty said, will begin next week.
“We can’t afford to be complacent, this is especially true in the case of volatility in the world economy,” Flaherty said.
With the global economic recovery progressing slowly and threatened on several fronts, the minister did say he’s prepared to be flexible, but his plan is to stick to “balanced budgets and low taxes.”
“I’m not going to raise taxes on business, large or small, that will make it hard for a company to expand at a time when too many Canadians are still looking for a job,” Flaherty said in prepared notes.
“I’m not going to create new programs that will bloat bureaucracy at the expense of our health and education systems that our children and grandchildren will rely on.”
Flaherty touted moves made in the budget last year that have helped reduce the deficit, such as Ottawa’s move to increase the eligible age for old age security, reducing the amount Ottawa contributes to public sector pensions and aggressively reducing tax loopholes.
He also mentioned the government will soon announce details on venture capital program that will be led by the private sector. Other areas of focus he mentioned include renewing the country’s infrastructure and expanding trade relationships from beyond the U.S. and commitment to tax breaks for small businesses that hire to stimulate job creation.