WATCH: Chief Political Correspondent Tom Clark joins Dawna Friesen to break down the numbers and look ahead to this year’s election.
OTTAWA – Finance Minister Joe Oliver guided his maiden budget voyage into port Tuesday with a precious cargo of targeted pre-election measures on board – and just enough leeway to keep the federal books above water.
The razor-thin $1.4-billion surplus projected this year – the first Conservative surplus in eight years and just the third since Prime Minister Stephen Harper took office riding a $13-billion surplus in 2006 – is entirely dependent on a lengthy series of bookkeeping measures, including asset sales, reduced reserve funds and unrealized collective bargaining gains.
“A promise made, a promise kept, Mr. Speaker, this budget is written in black ink,” Oliver told the House of Commons in a budget speech remarkable for its sharp partisan rhetoric.
The election subtext was also written all over the 518-page budget document.
Popular pocketbook measures for targeted voting blocks, a dominant emphasis on security spending and a play to patriotism are the Conservative election pennants.
They’ve also left precious little room for campaign spending promises by their opponents.
WATCH: Eric Sorensen takes a look at how deep deficits have affected past governments over the past three decades.
The template was set months ago, when Prime Minister Stephen Harper pre-empted his government’s 2015-16 spending blueprint by announcing a five-year, $27-billion package of family benefit increases and targeted tax cuts. The first retroactive cheques from that largesse will arrive in family bank accounts this July, with an election call expected by the first week of September.
However, the ship of state almost immediately began leaking revenues after Harper’s Halloween spending binge as global oil prices took a nosedive, and the resulting 2015-16 budget was late arriving and barely afloat.
Total program expenses this year are budgeted at $263.2 billion, up from $254.6 billion in 2014-15, while revenues are forecast at $290.4 billion in 2015-16, an increase of $11 billion over last year. Public debt charges are projected to fall by a billion dollars to $25.7 billion.
Marginal surpluses are projected for the next five years, topping out at $4.8 billion in 2019-20.
“If you want to come to the most important reason that we’re in a budgetary surplus today it’s that we’ve restrained public expenses,” Oliver said at a news conference, pointing to five years of government austerity.
However, to keep afloat in 2015, the Conservatives also threw overboard the usual $3-billion contingency reserve, cutting the cushion to $1 billion for the next three years at a time when global economic turbulence makes prudent assumptions all the more advisable.
They sold off a stake in General Motors – bought to prop up the auto industry in 2009 – for a net gain of $2.1 billion. They’ve booked $900 million in savings from civil service negotiations that have yet to take place, while offloading $1.6 billion in spending on veterans benefits into the previous fiscal year – effectively killing the 2014-15 surplus in order to preserve one for this election year.
“There’s a lot of things booked in here that are not based on economic fundamentals,” said Randall Bartlett, the senior economist at TD Economics.
“I wouldn’t necessarily call it the healthiest balance. Is it on the strength of the economy and the strength of revenues? It’s not.”
What the budget may lack in fiscal depth it more than makes up for in eye-catching policy (including balanced budget legislation), even if many of the new spending measures don’t ramp up immediately.
The major pre-election spending is aimed at families, with other priorities temporarily put on hold.
Starting in 2017, there’s money for major public transit systems that eventually will hit $1 billion annually. Those funds are expected to target Toronto, Vancouver and Montreal.
There are significant increases in the military budget, again starting in 2017, and a slew of security-related spending including more than $290 million over five years for the RCMP and Canada’s spy services to enforce the government’s new anti-terror law.
Seniors will see a package of benefits that include a relaxation of the rules on registered retirement savings redemptions, a near-doubling of the annual Tax Free Savings Account limit to $10,000, and new writeoffs for home retrofits to accommodate disabilities.
The tax rate for small businesses will gradually drop to nine per cent from 11 per cent over the next four years, there’s a 10-year accelerated capital cost allowance for manufacturers and new lifetime capital gains exemptions for fishermen and farmers.
Recently announced improvements to services for military veterans, meanwhile, were booked into the 2014-15 fiscal year just ended.
And in declaring that the “entire budget is about our unflinching march into the future,” Oliver queued up new funding for celebrations of Canada’s 150th birthday that totals $210 million over four years. The actual anniversary of Confederation is in 2017.
The rookie finance minister denied the budget was geared to an election year audience while making an ideal election year pitch.
“We believe, as we’ve said again and again, Canadians need a break,” said Oliver.