Finance Minister Ralph Goodale said the federal government posted a $9.1-billion surplus in its most recent fiscal year as a healthier-than-expected economy and higher corporate taxes boosted government revenues.

When Goodale presented his first budget last March, he projected a surplus of just $1.9 billion.

"The government's bottom line received a $5.1-billion boost from stronger-than-expected revenues," Goodale said Wednesday.

Finance Minister Ralph Goodale
Finance Minister Ralph Goodale

"Thanks to a resilient economy, the level of incomes and government revenues were higher than estimated in the last federal budget, illustrating that the Canadian economy successfully weathered the problems of 2003, which included BSE, SARS and the significant appreciation of the Canadian dollar," he said.

The surplus includes the $1.9-billion contingency reserve that was set aside in the 2004 budget and approximately $2 billion in lower-than-anticipated government spending.

All federal budget surpluses are used to pay down the federal debt. With the $9.1 billion so applied, the debt stood at $501.5 billion at the end of March.

The federal debt-to-GDP (gross domestic product) ratio now stands at 41.1 per cent, down sharply from its peak of 68.4 per cent in 1995-96. Ottawa said the ratio is now at its lowest level since 1983-84.

The federal government has now reported budget surpluses for the last seven years. In that time, the debt has been paid down by $61.4 billion.

Revenue projections have been underestimated so consistently that some critics see a deliberate strategy to dampen expectations from those hoping for tax cuts or spending increases.

On Sept. 29, Goodale appointed Tim O'Neill, chief economist at the Bank of Montreal, to review Ottawa's economic and fiscal forecasting.

The government said the review will analyze the differences between economic and fiscal forecasts presented in federal budgets and economic updates, and actual outcomes over the last decade.