Finance Minister Jim Flaherty said his governing Conservative Party will use its decisive election victory last week to ensure the nation erases its budget deficit in three years.
Speaking at a gathering of economic minds, Flaherty said the Conservatives will introduce a budget next month that will forecast a balance by 2014, even as the country moves ahead with planned corporate income tax cuts to help sustain the expansion.
Prime Minister Stephen Harper won a majority of seats in Parliament for the first time on May 2, giving him a mandate to bolster the economic recovery with additional tax cuts and erase the deficit with curbs on government spending.
The Conservatives’ election victory ended seven years of minority governments that have fueled government spending, and put the party in control of the federal agenda for the first time since the early 1990s.
Harper pledged to balance Canada’s budget with a review of government spending to find $4 billion in annual savings. The Conservative platform, which commits to reintroduce measures from the 2011 fiscal plan that wasn’t passed before the election was called, projects a $2.8 billion surplus in the fiscal year that begins April 2014.
The Conservative government’s most expensive pledge during the campaign was a measure that would let families with children under 18 split up to $50,000 in income for tax purposes. It would come into effect in 2014 and cost $4 billion through March 2016.
The Conservative platform also budgets $2.2 billion in compensation to Quebec for harmonizing its sales tax with the federal government. There is also new funding for the Canadian Coast Guard, crime legislation, fishing and agriculture.
The Conservative platform projects a 2011-12 deficit of $30.3 billion, $20.1 billion in 2012-13, and $7.7 billion in 2013-14. The federal government’s fiscal year begins April 1.
While Flaherty said a strengthening currency is a reflection of confidence in the Canadian economy, he added the government wants to avoid "jerky" movements in the Canadian dollar, and said the government wouldn’t intervene in currency markets without an extreme cause. Flaherty also said he doesn’t want to see increasing "weakness" in the U.S. currency.
