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Tory budget’s family measures trim surplus to $1.9B

They'll consume $27 billion from public coffers between 2014-15 and 2019-20.


OTTAWA, Ont. — Next year’s federal budget surplus will be $1.9 billion, the Finance Department says – $4.5 billion less than expected, thanks in large part to the Harper government’s multibillion-dollar cost-cutting proposals for families.

The expected surplus, unveiled Wednesday in the government’s fall fiscal and economic update, is a far cry from the $6.4-billion surplus projected in February’s budget.

That’s because of the Conservative government’s recently announced family-friendly tax and benefit initiatives, which will consume an estimated $27 billion from public coffers between 2014-15 and 2019-20.

Finance Minister Joe Oliver, who delivered the update at a luncheon in Toronto, defended the measures, which include higher child care benefits and a controversial income-splitting plan for families with children.

“We are providing families this financial relief for a simple reason,” Oliver said. “Across Canada, Canadians are telling us the same thing. The cost of everything, from groceries, to hydro, to housing, is going up.”

The update projected that Canada would run a $2.9-billion shortfall this fiscal year, matching the government’s projection in the federal February budget.

The document also examined the effect of declining oil prices on the Canadian economy.

Cheaper crude could drain $500 million from Ottawa’s bank account this year and $2.5 billion per year between 2015 to 2019, and cut Canada’s nominal GDP by $3 billion in 2014 and $16 billion annually from 2015 to 2019, it predicts.

“It is a prudent projection, adjusted for the recent decline in oil prices,” Oliver said.

Nonetheless, the federal government is projecting five straight years of surpluses: $4.3 billion in 2016-17, $5.1 billion in 2017-18, $6.8 billion in 2018-19 and $13.1 billion in 2019-20.

In the short term, however, it remains unclear whether the Harper government will have enough leftover cash to introduce additional cost-cutting measures for Canadians.

Income splitting for families with children will allow one parent to claim up to $50,000 of his or her spouse’s income in order to reduce the household’s overall income tax bill by a maximum of $2,000.

The Conservatives made the promise a central component of their 2011 election campaign, although it was strictly contingent on a balanced budget.

The government’s critics and political rivals have been denouncing the idea ever since, saying it would benefit only a small and relatively wealthy segment of the Canadian population.

That’s why the government wrapped it in a bundle of family-oriented measures that included an expanded universal child care benefit of $160 a month per child up to age six, up from $100, and $60 a month for children aged six to 17. Together, the measures stand to benefit every Canadian family with kids, the Tories insist.

The enhanced child care benefit replaces the existing child tax credit, starting in the 2015 tax year.

Prime Minister Stephen Harper has hinted that the government will soon follow through on another 2011 pledge: increasing the annual limit on tax-free savings accounts to $10,000, from $5,500.

The Tories still have an outstanding promise to introduce an adult fitness tax credit, though it’s not clear how the government might earmark any leftover surplus cash.

Mulcair calls Harper government surplus ‘a mirage’

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