The Harper government has effectively delivered on its promise to pull the federal books back to balance, with its budget this year projecting a surplus in 2015 that could top $6 billion -- surpassing all estimates to date. Finance Minister Jim Flaherty's budget, released Tuesday, positions his party very nicely to lard up promises so Canadians can share in the rewards next year when voters head back to the polls.
The Tories will have no trouble delivering on election promises it said in 2011 were contingent upon getting the budget back to balance: Income splitting for families with children, for example, will cost the treasury $2.5 billion. It falls in line with the party's favoured pitch to ordinary Canadians, helping them make ends meet while Canada continues to crawl out of the effects of a global recession.
The 2014 budget underscores the Tories' keen ear for widespread public sentiment. Recent polling has indicated Canadians are firmly in favour of holding back on new spending in order to eliminate the deficit. While Mr. Flaherty stressed this has come at no expense to services for regular families and taxpayers, his budget speech omitted to note there is pain for some.
The Harper government is estimating $7.4 billion in savings will flow over six years from cutting pay and benefits to public servants -- subject to negotiations with more than a dozen unions, playing on discontent among private-sector workers who do not share in the pensions and benefits enjoyed by most government employees. All federal departments, most particularly Defence (see editorial below), will continue to feel the austerity pinch with a freeze on spending or delay on planned new spending.
The budget gives the feeling prosperity is just around the corner, despite the fact the unemployment rate remains at seven per cent, and much higher for youth. Opposition parties immediately played on the dearth of job creation programs in Mr. Flaherty's budget speech -- his promise of interest-free loans to apprentices and assistance for the disabled in finding jobs only highlighted his government's inability so far to launch its vaunted national jobs fund.
The budget's assumptions of economic growth are based on expectations the U.S. will continue on its recovery path. But the Tories now have their campaign narrative firmly in hand, having skillfully led Canada through a bleak economic period and, while much of the developed world still struggles, have cut debt-servicing costs to a level unseen for decades. That's powerful fire in the face of promises to liberate Canadians from pot laws or reducing fees charged by banks.