HARPER DELIVERED MORE THAN EXPECTED

Everyone was expecting the Prime Minister to announce a change to the tax system to allow income splitting for families with children up to the age of eighteen. But he went much farther than anyone expected. He delivered much of the 2015 budget.

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READ THE FINE PRINT

Lots of discussion, debate and disagreement over the Prime Minister’s announcement last Thursday of the Conservative government’s proposals for support of families with children, which will be a critical part of their 2015 election platform.

 

Good on them. It was well done and politically very clever.

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ITS THE ECONOMY STUPID

It would be a gross understatement to say that the outlook for the global economy is not good.

In its October 2014 World Economic Outlook (WEO), the International Monetary Fund (IMF) reduced its forecast for global economic growth to 3.3 percent for 2014, 0.4 percentage points lower than in the April 2014 WEO. The global growth projection for 2015 was lowered to 3.8 percent. China accounts for one-third of this growth and without China growth for the global economy would be less than 2.5 per cent.

 

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BUDGET FORECASTING AND A FALL MINI BUDGET

It should not have come to anyone’s surprise that the announcement by the Prime Minister that the federal deficit for 2013-14 was $5.2 billion, substantially lower than the $16.6 billion forecast in the February 2014 budget.

Deficit targets have become political targets. The fiscal credibility of a government depends on achieving or doing better on its deficit targets. Failure by a government to hit its deficit targets is not looked on kindly by bond markets or by the rating agencies.

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DARK CLOUDS ON THE HORIZON

Most Canadians paid little, if any attention to the meeting of G-20 Finance Ministers in Cairns, Australia over a week ago. Too bad, because the communiqué that they issued at the end of their meeting showed that they are very concerned about the prospects for the global economy. It will be interesting to see how the up coming meeting of the G-20 Leaders respond to their Finance Ministers report.

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WELCOME BACK MR. OLIVER

You have been Minister of Finance now for about six months. Parliament will resume sitting this week and the House of Commons Standing Committee on Finance has already begun its pre-budget consultations.

 

You may be wondering what exactly you should do over the next 6 months leading up to the 2015 budget. Expectations are already running very high for this budget and a failure to fulfill these expectations could have serious political consequences.

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