“The Conservative government’s long-promised return to surplus relies on a series of accounting moves that includes slashing the contingency reserve, assuming oil prices will climb and collecting billions more in Employment Insurance premiums than necessary.
While economists say it is of little significance whether federal finances are in a small deficit or small surplus, Prime Minister Stephen Harper and Finance Minister Joe Oliver have made the return to surplus a central political pledge for the Conservatives. “A promise made, a promise kept,” Mr. Oliver said in his budget speech Tuesday. “This budget is written in black ink.” The government’s critics called it something else: economic sleight of hand. The 2015 budget promises to climb out of deficit and post a $1.4-billion surplus in 2015-16. That is accomplished, in part, by reducing the size of the annual contingency fund from $3-billion to just $1-billion per year over the next three years. Had Ottawa maintained the contingency fund at the levels used in budgets since 2012, the forecast would show deficits running for another two years,” writes Bill Curry for The Globe and Mail this Tuesday.
Curry continues, “The government is also keeping Employment Insurance premiums at higher rates than necessary to cover the costs of annual EI benefits. The budget shows the EI account will be in surplus in 2015-16 and that surplus will grow to $5.5-billion the following year. The government says it will balance the account over time by dramatically reducing EI premiums from $1.88 per $100 of insurable earnings to $1.49 in 2017-18.”
Read the full article here.
Raymond Matt, CFP, CLU, TEP, CHS
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