Politics

Spending cuts may come in spring budget, Conservatives signal

Conservatives say they will not increase the GST or introduce a carbon tax on the road to a balanced budget, but cabinet minister Jason Kenney tells CBC Radio's The House the government may have to cut spending further in light of falling oil prices.

Falling oil revenue may require 'some adjustments,' Kenney says

Conservative cabinet minister Jason Kenney says the government may have to extend the operating budget freeze in light of current volatility in the economy. (Darryl Dyck/Canadian Press)

Stephen Harper's Conservatives say they will not increase the GST or introduce a carbon tax on the road to a balanced budget, but at least two ministers this week have said the government may have to cut spending further in light of falling oil prices.

In an interview airing Saturday on CBC Radio's The House, Conservative cabinet minister Jason Kenney was asked by guest host Chris Hall whether the government could balance the books without further spending restraint.

"That's the question we'll have to assess in the budget. We'll have to calibrate whether additional restraint is necessary on the spending side but this is why it's important for us to keep taxes down and to focus on economic growth," Kenney said.

Finance Minister Joe Oliver said Thursday the government will not table a budget until at least April, given the current market instability.

Kenney defended the government's decision as the responsible thing to do.

"The government has a commitment to balance the budget and we'll do that. If that requires some adjustments, we'll make those adjustments and that's why having a little bit more time is a prudent thing.

But NDP Leader Tom Mulcair told The House the government's "wait-and-see approach" is a sign the Conservatives are "panicking."

How the government would restrain the growth of spending, Kenney did not say although he hinted at extending the operating budget freeze.

"It may require some kind of continued spending restraint. For example, we've had an operating spending freeze within the government… things like that may have to continue," Kenney said.

Earlier budget better than later?

Treasury Board President Tony Clement was responsible for overseeing a three-year operating budget freeze in 2010, which the government reintroduced for another two years in 2013.

In an interview with CBC News Network's Power & Politics earlier this week, Clement said falling oil prices would give the government less room to manoeuvre.

"We believe that we can get that balanced budget. It does mean that some of our other spending promises have to be looked at again… the flexibility has been removed but it's quite possible to get to a balanced budget," Clement said.

In Saturday's interview with The House, former Bank of Canada governor David Dodge said the government didn't have to delay the budget.

"If you don't have an accountant's fixation on a particular number... then in some sense what you might want is even an earlier budget to say what you're going to do to reorient your spending policy and just accept the fact that your deficit numbers are going to be considerably larger than they would have been at $75 US or $100 US [per barrel] oil."

"That's not the end of the world. We don't have a big debt problem," Dodge said.

Deputy Liberal Leader Ralph Goodale said on Thursday that delaying the budget until April is an admission by the government that they're in "a quandary."

TD Economics updated its forecast this week to project a $2.3-billion deficit in 2015-16 followed by a $600-million deficit for 2016-17, rather than the $1.6-billion surplus the government promised for 2015-16.

"In the absence of new measures to raise revenues or cut spending," the report said, "introducing significant new policy measures… in the current fiscal environment will be a challenge."

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