December 2013

Fiscal Monitor for April to October 2013

For the first seven months (April to October) of the fiscal year 2013-14, the federal government posted a deficit of $13.2 billion, an increase of $1.3 billion from that reported in the same period in 2012-13.  The year-over-year increase in the deficit was more than attributable to a $2.8 billion liability for disaster assistance for the 2013 floods in Alberta.  In the absence of this liability, the federal deficit would have been $1.5 billion lower.

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At a meeting of federal and provincial ministers of finance on Monday, the federal government punted CPP reform well into the future, certainly beyond the 2015 election.  Despite what appears to be a consensus among provincial finance ministers for more study on the nature and timing of reform, the federal government vetoed the idea by saying global economic growth was too uncertain and the domestic economy was too "fragile". According to Flaherty, the CPP premium is a payroll tax and increasing CPP premiums over the next two to three years would slow growth and kill jobs.

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Now Is A Good Time To Enhance The CPP

In a press release issued on December 8th, the Minister of State for Finance Kevin Sorenson argued that now is not the time to consider provincial proposals to enhance the Canada Pension Plan (CPP), given the fragile nature of the current economic recovery. This raises the obvious question as to when is the right time to consider long-term structural changes, which would improve retirement savings for most Canadians?

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