Flaherty promises ‘fiscal sustainability’ to keep Canada’s economy on track

Gordon Isfeld, Financial Post

 

OTTAWA — Finance Minister Jim Flaherty is sticking to his timetable for balancing the federal budget, even though lower prices for Canadian oil is “obviously a concern” for spending plans in the coming year.

 

Mr. Flaherty acknowledged on Wednesday that the “very substantial discount to international markets” is having an impact on government revenues.

 

“It is obviously a concern, not only in Alberta, but in our government about commodities prices, the price of oil,” he told reporters following a speech to the Economic Club in Ottawa.

 

We remain on track to balance the balance during this current [session of] parliament

 

The discount between Canadian and world oil prices ballooned to about $40 a barrel, although that gap has recently narrowed.

 

“Yes, it affects our budgeting because it affects commodities prices, obviously, which affect the level of nominal GDP, which affects the level of revenues. So that all follows,” he said.

 

“Having said that, we’ve taken substantial steps to reduce our own government spending [and] our own program spending.”

 

Mr. Flaherty reiterated the deficit build up during the 2008-09 recession will be eliminated by 2015, when the next election is expected to be called.

 

“We remain on track to balance the balance during this current [session of] parliament.” In his speech, Mr. Flaherty promised to continue the “fiscal sustainability” that kept Canada from the worst impact of the recession.

 

Reflecting on the Conservative government’s first budget in 2006, he said that document included cuts to the goods and services tax, provided universal child care benefits and paid down debt, “which put us in good stead when the bad times come.”

 

He said the focus is now on infrastructure spending, skills training and expanding trade agreements globally.

 

The budget will come “not too long from now,” he said, without providing a date, although it is widely expected to be tabled in late February or mid-March.

 

Wednesday’s marked Mr. Flaherty’s first public address since announcing last week that he has been taking medication for a “serious dermatological condition,” which has affected his appearance and speech.

 

Since then, the minister has taken a low profile as he deals with the skin conditions known as bullous pemphigoid, described by Mr. Flaherty’s office as serious but non-life threatening.

 

That condition has led to renewed speculation that he may be stepping down soon.

 

Mr. Flaherty, 63, has maintained he is not going anywhere and still plans to navigate the economy back to a balanced but before the next federal election, expected in 2015.

 

But there has also been speculation that Mr. Flaherty’s next budget might be his last.

 

On Wednesday, he told reporters that “in terms of my future, it’s always subject to the . . . direction of the prime minister. But, as I’ve said before, I’d like to see it through to a balanced budget.”

He added: “In terms of my capacity, I don’t have a challenge doing my job.

 

“I know how to do [budgets]. I know what’s involved, and we’re doing fine in terms of our tracking,” he said.