Budget comes up short on deficit: watchdog

OTTAWA — Parliamentary budget watchdog Kevin Page says the federal government’s plan to balance the budget is still about $10 billion short.

OTTAWA — Parliamentary budget watchdog Kevin Page says the federal government’s plan to balance the budget is still about $10 billion short.

Weighing in on the budget projections issued last week, Page said he finds that he and Finance Minister Jim Flaherty basically see eye to eye on the short term. But over the longer term, Page said he believes Ottawa is far too optimistic about how quickly it can balance the budget.

Last week’s budget predicted a $53.8-billion deficit at the close of this fiscal year, falling to $1.8 billion in 2014-15.

Page said the deficit will likely still be $12.3 billion at that time.

The disparity stems from Page projecting $6 billion less in corporate tax revenues, and about $4.5 billion higher spending, in part due to higher service charges on the national debt.

The budget watchdog does not doubt that the government has the ability to balance the budget, but said Ottawa will have to take additional efforts besides what it has already announced.

“Achieving budgetary balance would require the economy operating significantly above potential, actions to increase revenues or reduce spending (beyond the budget measures), or, some combination thereof,” Page wrote in his report.

In response, a spokesman for Flaherty noted the minister based his projections on private sector forecasts.

“Private sector economists widely agree that these are a prudent basis for fiscal planning, even if Kevin Page doesn’t agree. He’s in the minority,” said Chisholm Pothier in an email.

Pothier’s email to reporters contained quotes from several private sector economists that had praised Flaherty’s budget last week.