Ottawa is abuzz with rumours Finance Minister Jim Flaherty is finally going to announce the budget date today at noon in Ottawa. It’s been a suspenseful few weeks for finance reporters trying to read the tea leaves about when exactly the Harper government would table its 2013-2014 budget. The latest false start was a week ago, when Flaherty met with private sector economists to discuss their growth forecasts but left with no word on the big date.
Here’s what you should keep in mind when Flaherty speaks today:
1. The Canadian economy slowed to a near halt in the latter half of 2012, with growth for the year coming in at 1.8 per cent, down from 2.6 per cent in 2011. With the housing market cooling and consumers trying to kick their debt habit, growth must now come from other sectors of the economy, such as business investment and exports. Economists forecast a modest expansion for the next couple of years as well, with projections ranging from a low of 1.5 per cent growth in 2013 to high of 2.5 per cent in 2014. On Friday Flaherty said the government would likely have to downgrade its economic outlook in the budget.
2. Slower growth, the finance minister said, means lower-than-expected revenue. That, however, would not prevent the government from keeping its promise to balance the budget by 2015, he added. In order to do that, Ottawa would look into closing tax loopholes and perhaps more cuts to program expenditures: “That means no dangerous, risky new spending programs, careful control of the spending that we do control, no new taxes.”
3. After closing 2012 on a subpar note, there are signs — like a pick up in hiring and energy export volumes — that the economy might have rebounded a little in the first couple of months of the year. Maclean’s Stephen Gordon recommends the government leave the economy to run its own course.