MONTREAL — Ottawa needs to return to a balanced budget in order to have the capacity to adjust to any future unexpected global shocks, federal Finance Minister Jim Flaherty said Tuesday.
“Fundamentally, in our view, it’s about fiscal management,” Flaherty said a speech to the International Forum of the Americas in Montreal.
“It’s about making sure that we run surpluses, get back to a balanced budget and pay down public debt so that when we do have a crisis as we did in the fall of 2008 we have the capacity to act ”
After billions of dollars of stimulus spending, Flaherty said the government has to move back to balanced budgets because it’s unpredictable when the next shock might come.
The focus by 2014-2015 will be to cut $4 billion of spending annually, he said of the federal budget tabled Monday.
“This budget is really the first stage in our move back to balanced budgets in Canada.”
He said stimulus spending by the federal and provincial governments was a great example of the federation working well.
Canada has had seven consecutive quarters of growth ending in a strong first quarter, he said. It has also posted the strongest employment growth among the G7 countries since the recession ended in 2009, with the country having recouped all its lost economic output.
As a result, the International Monetary Fund has forecasted that Canada will have one of the strongest economic recoveries among the G7 countries this year and 2012.
However, Flaherty said it was important to “accomplish the goal of being prepared for the next difficulty that we may have in the global economy.”
“Countries the world over are learning the hard way to get their fiscal houses in order. It is a lesson that we must all heed.”
At last year’s G20 summit, leaders committed to halving by 2013 the deficits rung up during the recession and reduce debt to GDP ratios.
“In Canada’s case, we will overshoot these targets by a healthy margin,” Flaherty said.
Meanwhile, the finance minister reiterated the government’s commitment to increase health and education transfers to provinces and territories and to reducing the deficit without raising taxes.