Low commodity prices hitting revenues, but Ottawa finances on track: Flaherty - Macleans.ca

Low commodity prices hitting revenues, but Ottawa finances on track: Flaherty


OTTAWA – Finance Minister Jim Flaherty says lower commodity prices are impacting his government’s revenues, but not enough to derail its deficit elimination plans.

The finance minister made the assessment after consulting with private sector economists on Monday morning on the state of the economy.

The new consensus is that the nominal value of the economy will be $21 billion lower than budgeted for this year, and $29 billion lower both next year and the following year.

Flaherty says commodity prices for exports such as oil have been about five per cent lower than expected, impacting corporate profits and wealth creation as well as tax revenues.

According to one economist, that will translate into a $1.8-billion hit for the government this year.

The conclusion is similar to that reached by Parliamentary Budget Officer Kevin Page in a report earlier Monday that estimated the annual nominal gross domestic product of the country would be about $22 billion less than anticipated.

But analysts note that Flaherty took steps to plan for a downward surprise in his March budget, so the government remains on track to balancing the budget in 2015-16.

The minister would not be as definite, repeating language he has used for months that the deficit will be eliminated in the mid-term.

Flaherty says he will issue a revised budget projection when he tables the fall economic update in a couple of weeks.

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Low commodity prices hitting revenues, but Ottawa finances on track: Flaherty

  1. Flaherty’s annual “balanced budget” and our overall escalating debt, also known as the federal “deficit”, are very different.

    According to “Canada’s Debt History” at debtclock.com, Harper’s Cons have wiped out an 8-year long $105 Billion debt repayment:

    Their figures show that, between 1997 and 2008, our national debt (“deficit”) slowly declined to $458 Billion. Since 2008, however, during Harper’s Con control and leadership, our federal debt (“deficit”) grew by:

    – $5.8 Billion in 2008-09;
    – $55.4 Billion in 2009-10;
    – $34 Billion in 2010-11; and
    – $31 Billion in 2011-12.

    In addition, according to Flaherty figures, Canada’s debt grew by $21 Billion more than anticipated this year, and will grow by $29 Billion during the next 2 years.

    In other words, Canada will be approximately $605 Billion in debt at the end of 2012, and debt is projected to grow to at least $663 Billion (possibly more) in 2015.

    In just the 3 years between 2008 to 2011, Harper’s Cons completely wiped out all the debt repayment of $105 Billion that occurred during the previous 8 years, and are increasing the debt just as dramatically, too.

    Flaherty has not disclosed Canada’s dreadful federal debt (“deficit”) in his figures, but the national debt is important, too!