TORONTO (Reuters) - Canada will emerge from seven years of budget deficits that followed the 2008 financial crisis and show a C$1.9 billion ($1.7 billion) surplus next year, despite lower oil prices and a package of previously announced tax cuts.
Finance Minister Joe Oliver announced the projections on Wednesday in the fall update of the February budget, as parties stake out positions ahead of an election next October.
The update showed surpluses rising to C$13.1 billion by the year ending in March 2020. The government is expecting a C$2.9 billion deficit for this fiscal year.
“It is not easy to return to a balanced budget,” Oliver said in a speech that took aim at Liberal leader Justin Trudeau’s pledge to reverse some tax cuts if elected. “Budgets, after all, do not balance themselves.”
The update takes into account a projected C$26.8 billion in family tax cuts and benefits over six years. They were announced on Oct. 30.
Scott Brison, finance critic for the Liberals, said the government was doing nothing to reverse a projected decline in growth over the next several years.
“The government’s effectively emptying the wallet for pre-election tax measures,” he told Reuters.
A decline in oil prices over the past two months is cutting an estimated C$500 million from government revenues in 2014-15 and C$2.5 billion a year thereafter.
The budget figures also provide a C$3 billion contingency fund for each year. The government maintained the full C$3 billion cushion for this year, even though it is more than halfway finished.
This would mean underlying surpluses of C$100 million for this year and C$4.9 billion for 2015-16.
New Democratic Party leader Thomas Mulcair, in second place in the House of Commons but now third place in the polls, decried Conservative cuts and said his party would put more money to healthcare, child care and public transit.
“The Conservatives have now started to boast about an imminent surplus,” he said. “It’s all predicated on one thing - (spending) cuts they have brought in.”
Additional reporting and writing by Randall Palmer and Leah Schnurr in Ottawa; Editing by Jeffrey Hodgson and Lisa Von Ahn