Harper’s C$6.6 Billion Platform Sees 2014 Balanced Budget
April 08, 2011, 1:17 PM EDTBy Sean Pasternak and Theophilos Argitis
(Updates with employment report in sixth paragraph, currency trading in seventh.)
April 8 (Bloomberg) -- Canada’s Prime Minister Stephen Harper released his Conservative Party’s election platform, pledging C$6.6 billion ($6.9 billion) in new measures and accelerating Canada’s return to surplus.
The platform document, which was released today near Toronto, pledges a “strategic and operating” review of government spending with a goal of saving at least C$4 billion a year by 2014 that will be used to finance new tax cuts and spending, and allow the country to return to surplus one year earlier than projected last month.
“We know there is fat to be saved,” Harper told reporters in Mississauga, Ontario, a suburb of Toronto.
The platform builds on Harper’s March 22 budget, which wasn’t passed by Parliament before the governing Conservatives were brought down by opposition parties, triggering the May 2 election. The new measures, which were not included in last month’s fiscal plan, will boost the deficit in the next two years by C$1.4 billion more than earlier projected before savings allow the government to speed deficit reduction.
Harper is seeking to cast himself as the best manager of the economy, and criticized rival Liberal Leader Michael Ignatieff for pledging new spending measures that Harper says can only be financed by raising taxes. Ignatieff released his platform on April 4, pledging C$8.2 billion over two years to be paid for by reversing tax cuts for companies like Royal Bank of Canada and Suncor Energy Inc. implemented by Harper.
Jobs Decline
Statistics Canada said today that employment fell by 1,500 in March, the first decline in six months, as a record drop in part-time work outstripped the biggest gain in full-time positions in a year. The unemployment rate declined to 7.7 percent from 7.8 percent as the labor force shrank.
Canada’s dollar remained higher after the job report as investors focused on the 90,600 gain in full-time work, the biggest since September 2009. The currency traded at 95.67 cents per U.S. dollar at 12:57 p.m. in Toronto, from 95.82 cents yesterday. Earlier it was 95.27 cents, the strongest since 2007.
Polls suggest the Conservatives would win the most seats in the election, although it isn’t clear if they would win a majority.
The Conservatives were supported by 40.6 percent of decided voters, followed by 31.1 percent who supported the Liberals, according to a CTV/Globe/Nanos election survey published today and taken April 5-April 7. The telephone survey of 1,200 people has a margin of error of plus or minus 2.8 percent.
Campaign Pledges
Today’s announcement commits to reintroducing measures from the March budget, and includes campaign pledges that provide new tax cuts for families and new funding for the French-speaking province of Quebec.
Harper’s most expensive pledge is a measure that would let families with children under 18 split up to C$50,000 in income for tax purposes. It would come into effect in 2014 and cost C$4 billion through March 2016.
The Conservative platform also budgets C$2.2 billion in compensation to Quebec for harmonizing its sales tax with the federal government. There is also new funding for the Canadian Coast Guard, crime legislation, fishing and agriculture.
Harper’s government also pledged to drop its efforts to create a single national securities regulator if the Supreme Court rules against the plan in hearings to be held next week.
Fiscal Plan
Finance Minister Jim Flaherty released a five-year fiscal plan in Ottawa on March 22 that projected a C$29.6 billion deficit in the fiscal year that begins April 1, down from C$40.5 billion last year and a record C$55.6 billion two years ago. A surplus was projected for the 2015-2016 fiscal year.
The Conservative platform projects a 2011-12 deficit of C$30.3 billion, C$20.1 billion in 2012-13, and C$7.7 billion in 2013-14. It budgets a C$2.8 surplus in 2014-15 and C$5.1 billion in 2015-16. The federal government’s fiscal year begins April 1.
The Canadian dollar has appreciated 2.4 percent against its U.S. counterpart since the election was called, and the 30-year government bond yield has increased to 3.84 percent from 3.70 percent. The Standard & Poor’s/TSX Composite Index has risen 1.3 percent. The election probably won’t shake “market confidence” Toronto-based Canadian Imperial Bank of Commerce economists Avery Shenfeld and Warren Lovely wrote in a March 31 report.
--With assistance from Greg Quinn in Ottawa. Editors: Paul Badertscher, Kevin Costelloe
To contact the reporter on this story: Sean Pasternak in Toronto at spasternak@bloomberg.net; Theophilos Argitis in Ottawa at targitis@bloomberg.net
To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Christopher Wellisz at cwellisz@bloomberg.net.
