Canadian government promises balanced budget law, sees free trade with EU

Sat Oct 19, 2013 11:05pm EDT
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By David Ljunggren and Randall Palmer

OTTAWA (Reuters) - Canada's Conservative government on Wednesday promised to introduce legislation that will require balanced budgets except during economic crises, and renewed a pledge to balance its books by 2015.

It also said it would soon wrap up free trade talks with the European Union, and announced that Prime Minister Stephen Harper would travel to Brussels on Thursday "with the goal of concluding the ... negotiations."

The Conservatives, who portray themselves as the only party capable of leading Canada through tough economic times, said they would cut government spending, sell off some federal assets and trim the public service.

The Conservatives made the announcement in a major policy speech designed to relaunch their mandate ahead of an election in October 2015. The party is trailing in the polls after a protracted scandal over Senate expenses.

"Our government will introduce balanced-budget legislation. It will require balanced budgets during normal economic times, and concrete timelines for returning to balance in the event of an economic crisis," said the speech, which gave no details.

Canada is one of a handful of countries with a prized AAA rating from leading agencies, and Ottawa's promise to make balanced budgets a key part of its policy stands in stark contrast with the acrimonious debates on U.S. debt financing.

U.S. Senate leaders announced a deal on Wednesday to end a political crisis that partially shut down the federal government and brought the world's biggest economy close to a debt default, but it will only be a temporary solution that sets up the prospect of another showdown.

The Canadian government repeated a campaign pledge that once the budget is balanced it would provide greater tax relief for families, and it also said it would look at ways to cut taxes for small business.   Continued...

Alex Robinson (C), a member of Canadian Prime Minister Stephen Harper's staff, uses his mobile device outside the room where the Conservative caucus was meeting on Parliament Hill in Ottawa October 16, 2013. REUTERS/Chris Wattie