Highlights from the fall fiscal update

YorkRegion.com
Nov. 12, 2014

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.