Canada’s Conservative government said on Thursday that its federal budget will cut the country’s record deficit and move toward near balanced budgets in five years by cutting defense spending, international aid and government operations.
Canadian Finance Minister Jim Flaherty announced details of the budget to mixed reaction.
Opposition Liberal leader Michael Ignatieff and New Democrat Party leader Jack Layton said they will not support the budget, but they also will not trigger an election.
“We can’t support this budget so we’re going to be voting against it, but not in sufficient numbers to bring an election on,” Ignatieff told reporters. “Canadians don’t want an election.”
The Conservative minority government holds half the seats in Parliament, which means they need the support of at least one of the three opposition parties to pass the budget
A failure to pass the budget typically forces an election.
Had the Liberals voted in favor of an election, it would have been the country’s second election in two years and its fourth in five years. Before the global recession hit, Canada boasted 11 straight surpluses.
The country is carrying a record deficit of C$53.8 billion (US$52.2 billion) this year, the government reported. It now also forecasts a deficit of C$49.2 billion for this year to next year, up from C$45.3 billion predicted earlier.
The record deficit is partially a result of the recession-fighting stimulus spending announced a year ago, a figure the government put at C$19 billion.
As government stimulus measures expire next March, revenue recovers and spending cuts are implemented, the deficits will plunge dramatically to C$1.8 billion for the 2014 budget, Flaherty said.
However, by then, the total federal debt is projected to hit C$622 billion — up CA$136 billion from the CA$486 billion on the books when Harper took power in 2006.
“We are committed to returning to surpluses,” Flaherty said during a news conference. “I don’t like running deficits. We had to run this deficit temporarily because of the most serious economic crisis since the 1930s.”
To chip away at the deficit, budget savings will come from cuts to government operations, including a freeze on departmental operating budgets at this year’s levels and frozen salaries for the prime minister and lawmakers.
The government will also cap the foreign aid budget at this year’s levels, removing its annual 8 percent international aid increase.
Flaherty said tax changes, and cuts to domestic and foreign aid, defense and departmental operating budgets will save C$17.6 billion over five years.
“Listen, this is a very tough budget,” Flaherty said. “Some very difficult decisions have been made. Most of the answers to requests for funding were ‘no.’”
The government will also provide additional funding for innovation, maintain planned corporate tax cuts and eliminate import tariffs for manufacturers.
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