The much-anticipated 2015 Federal Budget was released yesterday. For seven years we've waited for a balanced budget, and, at least in name, that's what we got. Finance Minister Joe Oliver announced yesterday that we should expect a surplus of about $1.4 billion next fiscal year. This certainly puts the Conservatives in a good place for the upcoming election, but what is the real economic impact for Canada?
Oliver's budget brought in a slew of new, rather tangible, measures. These include changes to the tax rate for small business, renovation tax credits, and doubling the annual contribution caps for TFSAs. The catch with all this is that none of proposed changes are supposed to come into effect for some time (most after 2017). The implication is, evidently, that if you want these measures you'd best vote for Harper in October.
These changes are expensive. In the case of the TFSA there is significant data that this will cost billions to manage. When combined with poor oil revenues, the picture of the Canadian economy is rocky at best. In fact, some economists have indicated that this budget almost looks like a recession budget.
But what about this surplus? Ever since Oliver announced that he would be delaying the release of this year's budget, there has been talk about whether or not it would reverse the trend of the last seven years. The messaging of the government recently has been consistently hinting toward a surplus, but the announcement fell a bit flat with only $1.4 billion offered up. To some, the fact that it is a surplus will be enough, but with all the expectation built up over the past two months, to some this will be disappointing.
The sum is rather pitiful when you consider that much of this revenue comes from asset selling (such as shares in GM) or by cuts to the public sector. Tom Mulcair is right to consider the budget to be an economic sleight of hand. Projections for the next years will likely not come to pass since there is an election in way. Moreover, these numbers are very much contingent on the performance of the tar sands in a market with low oil prices. There has also been criticism that the federal government intends to use the contingency fund which the opposition argues is meant for emergencies, not routine shortfalls.
In an election year, we can't overestimate to what decree this announcement is all about politics over policy. Oliver has dangled some shiny things in front of voters and we are ramping up to a big decision.The budget should have Canadians concerned, asking tougher questions about what our economic situation is. In some way, the announcement should also provide clarity on which demographic groups the Conservatives are targeting for the fall.