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Federal Budget 2014 -
Following Through: No Surprises Federal Budget Moves to Surplus

Getting back to surplus remains the cornerstone of federal budgeting. With the deficit having swelled to more than $55 billion in the aftermath of the 2008-09 Great Recession and Financial Crisis, Finance Minister Jim Flaherty delivered a budget that has the government on the cusp of returning to the black. This is an admirable accomplishment, one achieved without any significant tax increases and involving a hefty dollop of restraint after spending had been ramped up during and after the recession.

 Highlights

  • Budget 2014 confirms that the federal government is on course to return to surplus position in 2015-2016. The deficit for the coming fiscal year is projected to be a slim $2.9 billion. But it’s quite likely the deficit will be eliminated in 2014-15.
  • The move back to surplus is achieved mostly through tight expenditure management, with a two year spending freeze for all departments, a deferral of defence procurement, and reforms to public sector benefit programs.
  • The only notable tax change in Budget 2014 is higher taxes on tobacco.
  • Asset sales are also part of the balancing equation and are expected to add $500 million this fiscal year and $1.5 billion in 2015-16.
  • The economic assumptions underpinning the Budget foresee the Canadian economy growing by 2.3% (in real terms) this year and by 2.5% in 2015, in line with private sector projections.
  • Spending priorities are in the areas of labour market development and skills training as well as innovation and some funding for infrastructure.