Canada is on track to post a budget surplus of $5.9 billion when the federal government's current fiscal year ends in March, Finance Minister Ralph Goodale said Tuesday.

"Many other countries are still struggling with stubborn deficits and escalating debt – including all of our partners in the G-7 group of nations. All except Canada," Goodale told the House of Commons standing committee on finance.

When Goodale presented his first budget in March, he originally projected a surplus of $4 billion for the current fiscal year.

Ralph Goodale delivers his economic and fiscal update.(CP Photo)
Ralph Goodale delivers his economic and fiscal update.(CP Photo)

Canadians expecting some of the surplus to go toward lower taxes will be disappointed, however. Prime Minister Paul Martin said tax cuts won't be coming any time soon despite Ottawa's larger-than-expected multibillion-dollar surplus.

Goodale said that budget figure does not include $3 billion set aside for the government's contingency reserve and additional prudence.

He said the surplus expected this year includes $2.6 billion in net proceeds from the sale of the government's stake in Petro-Canada, lower debt charges due to lower interest rates in 2004, and the release of $1 billion that had been set aside in the 2004 budget for this year.

Looking ahead, Goodale said Ottawa expects future surpluses to be:

  • $500 million in 2005-06.
  • $900 million in 2006-07.
  • $3.2 billion in 2007-08.
  • $7.5 billion in 2008-09.
  • $11.5 billion in 2009-10.

The finance minister said private-sector forecasts indicate Canada will see stronger economic growth in both 2004 and 2005.

"On average, they expect growth of three per cent in 2004 – up from the 2.7 per cent predicted at the time of the last budget. For next year, 2005, they are forecasting that growth will reach 3.2 per cent, close to the 3.3 per cent reported in Budget 2004," Goodale said.

However, he cautioned that the rising Canadian dollar, higher oil prices and the U.S. fiscal deficit could put pressure on economic performance.

In mid-October, Goodale said the government posted a $9.1-billion surplus for 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.