After hearing news last week that Nova Scotia aims to balance its 2013-14 budget, the federal government declares it is still on track to do the same by its target of 2015.
With the upcoming federal budget delivery planned for March 21, Finance Minister Jim Flaherty says sticking with the goal of balancing the books by 2015 will mean a need for fiscal restraint, particularly in view of a less than robust economy.
That could require closing some tax loopholes – nothing wrong with that – and miscellaneous trimming of spending, he suggested, but nothing momentous, such as tax hikes or cutting transfers to provinces.
How tough it will be to make that 2015 goal, of course, will depend largely on economic growth in the meantime. But that dilemma in itself should offer a lesson in how to plan government finances over the long term – that is, the boom times aren’t always with us.
Obviously, not everyone is as bent on frugal measures.
This past week the Canadian Centre for Policy Alternatives offered its annual take on the spring ritual of budget unveiling, urging an increase in spending to help create jobs. The group argues that the move would stimulate economic growth, thus boosting government revenues and still enabling balance of the budget on target.
That might be easier to swallow if deficits hadn’t been the default position of most governments for the past four to five decades whenever balance seemed a bit out of reach. Those back-to-back deficit budgets – other than during the several years the Liberals eliminated the red ink – have snowballed into increasingly hefty debt.
Granted, Canada is in a better position than many countries in this regard, enviable some describe it, and a good way to stay.
Fostering the right conditions for the private sector to grow is always the best way to stimulate economy – and with prudent government finances, not a return to a frenzy of spending during good times, the rest should take care of itself.