Minister of Finance Ralph Goodale today predicted a $5.9 billion surplus for the current fiscal year, along with 3% economic growth. Goodale announced the forecast in his first economic and fiscal update presentation to the House of Commons Standing Committee on Finance.
Stronger economic growth and balanced budgets the main messages in the update. Goodale said that economic growth, based on forecasts by private sector economists, is expected to be 3% in 2004, which is higher than forecast in the March 2004 budget. For 2005, private sector economists expect growth of 3.2%.
The Minister highlighted the Canadian economy’s resilient recovery from a number of shocks last year such as SARS and BSE. He added that Canada’s economy has created nearly 400,000 new full-time jobs in the last 14 months.
The Minister also reiterated the government’s commitment to keeping budgets balanced or better, a commitment backed by an annual $3-billion Contingency Reserve and additional economic prudence.
He announced the following surplus projections for this year and the next five years:
- 2004–05: $5.9 billion;
The surplus projections announced today take into account the Contingency Reserve and additional prudence. They also include the cost of the recent agreement on health care, the new framework for equalization and Territorial Formula Financing, and other spending decisions made since the last budget, primarily for assistance to the cattle and beef industries.
Goodale explained further that these figures do not include any savings from the government’s expenditure review process, which should be completed in time for the next budget.
The projections have been developed by four leading economic forecasting agencies in Canada, based on assumptions obtained from a survey of 18 private sector economists.
Goodale said that since the budget deficit was eliminated in 1997, Canada has ranked first among all Group of Seven (G7) countries for growth in living standards, with the average standard of living rising faster in the past seven years than in the previous 17.
Looking to the future, the Goodale pointed out that Canada must continue its efforts to meet the challenges faced by an aging population, which will increase demand for health care and other social services and increase Canada’s reliance on productivity gains to ensure continued growth in the country’s standard of living.
He said that is why Ottawa has set an objective to reduce federal debt as a percentage of gross domestic product to 25% within the next 10 years.