It would be hard to imagine the 2015-16 federal budget looking the same if an election wasn’t scheduled in Canada later this year.
The promise to balance the federal budget was kept by the Conservative Party of Canada, who were elected while the country was running a deficit of more than $55 billion.
At the end of this year, the feds are expecting to take in $1.4 billion more than they spend. If their spending plan comes true, Canada can use that surplus to chip away at the $614 billion that we collectively owe in debt. Individually, that’s more than $17,000 per Canadian.
When the Conservative Party won their first majority in 2011, Canada’s debt was sitting at $519 billion, and a deficit of nearly $30 billion was in place. It was truly impressive how the Conservative Party figured out how to curve that massive public deficit into a surplus in just four years. As Finance Minister Joe Oliver said on Twitter, “This budget didn’t balance itself.”
But in fulfilling their promise and painting themselves as fiscally responsible before this year’s election, it seems as though they borrowed from the future without having to call it debt.
Because of the obvious cost and burden of debt, running a deficit never sounds like a good idea. But for an organization that looks after tens of millions of people, the way the Government of Canada does – you can’t always save up until you can afford what you want. By investing with borrowed money, the revenue that can be taxed off the commerce facilitated through public spending (i.e. infrastructure and tax cuts), will ideally outweigh the interest from the debt.
By spending billions of dollars to bail out General Motors and Chrysler, the government was investing in their success, at a time when the whole world’s private investors were willing to let them crash and burn. Thanks to the bailout, those two auto companies are both back on their feet, and private investors see value again in purchasing their shares. One reason why the federal government didn’t account for a deficit was by off-loading the remaining shares they had with General Motors, and will collect a one-time payment expected to be over $3 billion.
Another reason the Conservative Party avoided a deficit is because they took the surplus from the country’s Employment Insurance account, which could have otherwise been applied to lower premiums. Or it could have been saved in case the program runs a deficit in the future.
Our surplus was achieved also by dipping into a piggy bank called the contingency fund. The account was never well-defined, but in taking $2 billion of $3 billion out, it seems like that money was contingent upon fulfilling partisan promises.
I can appreciate the intelligence it would have taken, year-after-year, for the Conservatives to present a balanced budget for 2015. And because they want to win the political popularity contest again this year, it’s hard to blame them for making investments that may not be in the long-term interests of Canada.
-Dan Walton is a reporter for the Penticton Western News.