Economic analysis

Highlights from Joe Oliver's fiscal and economic update

Highlights from the finance minister's annual fall update and five-year projection of the government's fiscal situation

Frank Gunn/CP

Frank Gunn/CP

OTTAWA – Finance Minister Joe Oliver delivered his annual fall update and five-year projection of the government’s fiscal situation on Wednesday. Here are the highlights:

— A small deficit of $2.9 billion expected for the 2014-2015 fiscal year, the same as projected in the February budget.

— A small surplus of $1.9 billion expected for the 2015-2016 fiscal year, much smaller than the $6.4 billion projected last February mainly because of recent announcements for spending increases and tax cuts.

— Surpluses forecast to grow slowly every year after that: $4.3 billion in 2016-2017, $5.1 billion in 2017-2018, and $6.8 billion in 2018-2019.

— Government has set aside $3 billion in contingency funds every year, including the current fiscal year. If not needed, the money goes towards the debt.

— Lower oil prices this year translated into a $500-million hit to the bottom line in 2014-2015, and $2.5 billion per year over the 2015-2019 period.

— Federal debt will rise slightly to $615.8 billion in 2014-2015 before diminishing gradually over the next five years. As a percentage of the economy, the federal debt in 2014-15 is forecast to be 31.5 per cent of GDP, dropping slowly over the coming years to 24.3 per cent in 2019-2020.

— Overall federal tax burden drops to lowest level in 50 years for now, but personal income tax as a percentage of GDP expected to reach 7.1 per cent next year, up from 6.9 per cent this year, and 7.3 per cent in 2019-2020.

— The government has recommitted to introducing balanced budget legislation, a promise made initially more than a year ago in the 2013 throne speech.

— Economists told Ottawa to expect real growth of 2.4 per cent in 2014 and 2.6 per cent in 2015. Those projections were made in September before commodity prices tanked; the government has had to trim expectations for government revenue.

— The employment insurance account has a $3.8-billion surplus in 2014-2015, $3.9 billion in 2015-2016 and $4.5 billion in 2016-17 — allowing the government to stay in the black despite new spending and tax cuts.