Oliver Says Canada ’Very Close’ to Eliminating Budget GapAndrew Mayeda
Canadian Finance Minister Joe Oliver said his government is getting “very close” to eliminating its deficit and is preparing to give a budget update that will stress fiscal prudence.
The budget update will send the message that Canada is “in good shape, relatively,” Oliver said in an interview with Erik Schatzker at the Bloomberg Canadian Fixed Income conference in New York today, adding the update usually comes in late October or early November.
“We’d like to grow faster,” he said. “We’re going to focus on creating more jobs, but the international financial environment is fragile. There are risks, particularly outside North America, and we have to remain fiscally responsible.”
Prime Minister Stephen Harper’s government has made a priority of returning to surplus after years of budget deficits in the wake of the 2008 financial crisis. Harper’s Conservatives are seeking to project an image of sound economic management ahead of federal elections slated for October 2015.
Canada’s economy was little changed in July as a drop in oil and gas production offset gains in manufacturing, Statistics Canada reported today.
The government said in its February budget it would post a deficit of C$2.9 billion ($2.6 billion) in the year that began April 1, followed by a surplus of C$6.4 billion in the next fiscal year.
Oliver said the government will use the surpluses to increase infrastructure spending and said tax cuts for individuals and businesses are a priority.
Asked about U.S. concerns over tax inversions, Oliver said Canada’s tax system is designed to “attract and retain capital.” Treasury Secretary Jacob J. Lew said this month the U.S. is finishing work on measures to limit inversions, in which U.S. companies seek to reduce taxes by relocating abroad. “Canada is not a tax haven,” Oliver said.
The finance minister said concerns about elevated household debt in the world’s 11th largest economy are overblown. Potential overheating in Canada’s housing market is mainly confined to cities such as Toronto, Vancouver and Calgary, he said, adding “we don’t see a bubble.”
While Canada considers it imperative to diversify its energy exports, the nation won’t be able to wean itself “overnight” off dependence on U.S. demand for crude and natural gas, Oliver said, when asked about the Keystone XL pipeline.
TransCanada Corp.’s Keystone project would link crude from Alberta’s oil sands to refineries along the Gulf Coast. The route, which was first proposed in 2008, is being reviewed by the State Department and needs President Barack Obama’s approval.
“The markets are there, but we literally have to deliver,” Oliver said. “To do that, we’ve got to build the infrastructure to get the resources to tidewater.”