Will Canada Return To Surplus In 2013?

Government Unveils Second Quarterly Progress Report

Back in January, when Finance Minister Jim Flaherty unveiled the government’s $22.7 billion stimulus plan, there was a little bit more work to do – steering it through parliament. This was no small matter, as the opposition Liberal party reserved the right to puncture the entire plan and potentially bring down the minority Conservative government. In return for not doing so the liberals demanded, among other things, quarterly progress reports on how the stimulus was working out. Thursday the 11^th was the date for the second of these reports, and Prime Minister Stephen Harper duly delivered a report which contained no earth-shattering news but a good deal of broadly positive information.

The headline news of the second progress report included the announcement that 3,000 or more infrastructure projects are being or have been started. Pointing out that that counts for a lot just 72 days into the new tax year, Prime Minister Harper added that four fifths of the proposed funding mentioned in the plan have already been allocated. As far as new announcements went, the report was mot forthcoming, concentrating instead on a review of what has been done, and a recognition of what remains to be done. The report came in the wake of the Prime Minister advising his opposite number in the Liberal party, Michael Ignatieff, to avoid doing anything rash. For Prime Minster Harper’s words – an entreaty not to put the public through another election – it is possible to read another interpretation: “Please don’t trigger another election, because I will probably lose it”.

There is a good deal of positive acknowledgement for what PM Harper is asking – changing governments in the middle of a recession is always risky, but there also seems to be some recognition of the embattled position in which the premier finds himself, with him saying “the only thing that can get us off course now is political instability.” A simple message, but with the underlying threat – “destabilize things now, and suffer the anger of the public when it takes longer to get out of the recession.” As of this moment, neither Ignatieff nor his party have spoken specifically about whether the stimulus report gives enough reason to refrain from pulling the plug on the government.

Among the other major news in his speech, Prime Minister Harper took time to mention the changes made by his party to Employment Insurance. At such a crucial time for business survival, layoffs are to be expected. With unemployment at an eleven-year high and threatening to escalate, it will be more important than ever to prioritize Employment Insurance, and the government is set to spend a further $5.5 billion making sure that insurance is secure. With a deficit set to reach $50.2 billion for the current year, Finance Minister Flaherty has promised that Canada will get back in the black, but made no specific promises as to when. The initial timetable of a return to surplus in 2013 has not been repeated, leading some to question whether it is possible.

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