OTTAWA -- Canada's promise to get back into the black by 2015 was tossed out the window Tuesday.
In a speech in Fredericton, N.B., Tuesday, Finance Minister Jim Flaherty admitted the government will not be able to balance the books until at least 2016-17, a year later than he has been promising for the last three years. Canada will also see deficits increase by $20.4 billion over the next four years, forced upward by shrinking revenues in the face of global economic weakness.
"Canada has clearly been affected by volatile and falling world commodity prices since the budget in late March," he said.
Eight months ago, Flaherty predicted he would be able to balance Ottawa's books again in 2015-16. However, the latest economic figures suggest he will have an average of $7.2 billion a year less in revenues than he anticipated over the next four years. It means the federal government's deficit this year will be $26 billion, $5 billion more than Flaherty estimated in his 2012-13 budget last spring. Next year, the deficit will climb to $16.5 billion from $10.2 billion, and in 2014-15 it will jump to $8.6 billion from $1.3 billion. In 2015-16, the once-projected surplus of $3.4 billion is going to be a deficit of $1.8 billion.
In 2016-17, the government now anticipates posting its first surplus since 2009, projecting a $1.7-billion surplus.
Flaherty had been predicting a return to a balanced budget in 2015-16 since at least 2010 -- and Prime Minister Stephen Harper promised as much during the 2011 federal election. However, the change likely won't be a surprise to many financial experts, many of whom have previously said Ottawa was putting far too rosy a spin on the country's economic growth projections in the last three budgets.
Opposition parties, too, were quick to jump on the government for not getting it close to right.
NDP finance critic Peggy Nash said Flaherty and the Conservatives have been "wrong on every forecast" and was critical of the government for wasting money on tax cuts for businesses that have not resulted in job creation.
Manitoba Finance Minister Stan Struthers said he is watching to make sure Flaherty keeps his promise -- reiterated Tuesday -- he will not balance the books by cutting transfers to the provinces. Any federal cuts would cripple the Manitoba government, which relies on Ottawa for more than $1 out of every $4 it has to spend. Manitoba recently had to more than double the forecast for the 2011-12 deficit to nearly $1 billion and is trying to hit its own election promise to balance the province's books by 2014.
Struthers dodged questions Tuesday about whether that target will be met, saying only these are tough economic times and the province will not balance the books by cutting core services such as health care and education.
He said he can sympathize with Flaherty.
"There are a lot of factors that are beyond the control of Mr. Flaherty," he said. "We do, though, need to ensure we are making the right decisions on factors we can control."
Flaherty cautioned Tuesday Canada's finances are dependent somewhat on whether the U.S. Congress and re-elected President Barack Obama can come to an agreement before Jan. 1 to solve the U.S. fiscal crisis.
-- with files from The Canadian Press