Joe Oliver is right where he wants to be — on razor's edge
Conservatives aren't about to waver from balanced budget promise now - and there is little reason to
Joe Oliver looked confident and composed as he faced reporters on Wednesday in Vancouver.
And why not?
The Central Bank had just warned the day before that oil was showing no signs of recovery in the near future.
TD Economics drew an "unambiguous" conclusion: falling oil will erase 2015’s surplus.
On the surface, they are dire warnings that could threaten key planks in the Conservative’s re-election platform: slaying the deficit and cutting taxes.
But the Finance Minister didn’t flinch.
"I’m proud," he intoned, "that our government is on track to achieve a balanced budget in 2015."
There are two reasons the Conservatives needn’t worry about predictions that 2015 will end up in the red.
The first is that the numbers being bandied about right now are insignificant when viewed through a purely economic lens. The second is that the final verdict on Budget 2015 will come out far too late to be viewed through a political lens.
"The next federal budget will forecast a surplus of about $1.6 billion," Oliver told reports on Wednesday. "That projection takes into account falling oil prices," he added, to make sure everyone knew he meant it.
That number is slightly lower than the $1.9 billion surplus he predicted last November, but still more optimistic than TD’s $2.3 billion deficit forecast.
The spread between Oliver and the bank is less than one per cent of the government’s combined spending and revenues for the year.
From an economics standpoint, this really isn’t a big deal. But this is an election year, so Oliver needs to use that wiggle room.
"There are positive and negative implications to falling oil prices," Oliver reminded us.
A slightly less pessimistic view on the impact of lost revenues due to oil — a slightly more rosy view of the boost consumer spending and manufacturing will get from cheap gas and a low dollar — and that fraction of a percentage point very quickly disappears.
That’s not to say Oliver isn’t happy to keep the surplus on a knife’s edge.
The Conservatives have been very successful at framing their opponents before they had a chance to introduce themselves to Canadians – but have so far had less success telling Canadians what to think about Liberal Leader Justin Trudeau.
So the strategy has switched somewhat – frame the situation rather than the person
"The world’s troubles could come to our shores," Oliver conceded, but quickly added, "Which is why we cannot afford the risk that would come with unaffordable government programs."
To be clear, he was talking about the NDP, and its daycare promise, and the Liberals, for when they eventually reveal what it is they might promise.
The message right now is that there is just enough money to cover the election promises made in the 2011 campaign – but after that, the cupboard is bare.
"It was important to make the announcement when we did so that we could start providing the benefits right away," Oliver explained.
Although, by "right away," he means months from now.
Canadians will be able to apply the Family Tax Cut (the replacement for the income splitting promise) to their 2014 income taxes, which are due at the end of April.
The boost to the Universal Child Care Benefit payments started accruing on January 1st of this year, but the cheques don’t go out until July.
Meaning, every single Canadian family with children under the age of 18 this year will receive at least $420 per child from the government this summer.
(Which is why I argue there is virtually no chance Stephen Harper is going to call an election this spring – even if that’s a position that seems to put me in the minority in Ottawa these days)
Logic would dictate that if you admit you are pulling in less money, and spending more on expensive tax cuts, the razor-thin budget surplus should be under threat.
But the final verdict on the bottom line of any given fiscal year for the government comes in the Public Accounts – tabled at the end of October.
Meaning, whatever the number that appears in Oliver’s next budget, no one will be able to say with any certainty if it’s right or wrong until October of 2016.
A full year after the next election.