A weaker economic outlook, coupled with the aggressive tax cuts contained in the October 2007 Economic Statement, has limited the federal government’s ability to introduce new budget measures.
The 2008 Federal Budget: The End of Surplus
The 2008 Federal Budget: The End of Surplus
Canadian Economic Analysis
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- A weaker economic outlook, coupled with the aggressive tax cuts contained in the October 2007 Economic Statement, has constrained the ability of the federal government to introduce significant budget initiatives.
- Reflecting lower planning surpluses, the federal government has allocated only $1.5 billion in fiscal year 2008–09 and $1.7 billion in 2009–10 toward new measures.
- The fiscal outlook for the next two years is tighter than in previous budgets. With only a small contingency reserve, there is heightened risk that the federal fiscal position could tip into deficit should the economic situation worsen.
- Some $500 million is allocated in 2007–08 to upgrade public transit infrastructure. Unfortunately, it will be allocated on a per capita basis.
- Innovative ideas in the 2008 federal budget include a tax-free savings account, the auto innovation fund, enhanced support for students, and federal investment in environmental technologies such as carbon capture and storage.
- The amounts associated with each measure in the 2008 federal budget are generally so small that they will have little impact in terms of achieving the federal government’s policy goals.
- The Conference Board of Canada’s economic outlook for 2008 and 2009 remains unchanged by the 2008 federal budget.
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