Federal Finance Minister Joe Oliver said he will delay tabling the budget until April due to economic uncertainty caused by falling oil prices.
Speaking at a Calgary news conference Thursday, Oliver said that the federal government needs more information before it can begin finalizing the budget. The last budget was released in February 2014, and the budget in 2013 came out in March of that year.
The minister said that there are benefits to lower oil prices, particularly for consumers and manufacturers. But there are also consequences, with the profits for energy companies taking a hit, along with federal and provincial government tax revenues.
Oil prices have dropped significantly to about US$45 a barrel, down from last summer when the price was about US$100.
"The bottom line is the intermediate term impact on real GDP will be broadly neutral, but the impact on nominal GDP will be negative," he said.
Oliver said analysts generally agree that oil prices will eventually rise again, given the long-term demand for energy.
"For Albertans and other people in the energy sector that has meant and will continue to mean prosperity at home," he said. "During this difficult time for Alberta, our federal government is taking action to secure your prosperity."
NDP Leader Thomas Mulcair said the Conservatives were likely “going to do some razzle dazzle” in the budget, but “calmer heads in the finance department said: ‘You’ve got to be kidding, the numbers aren’t there.’”
Pointing to Target’s announcement that it will close all of its Canadian stores, as well as layoffs at Suncor Energy Ltd. and elsewhere, Mulcair said “the wheels are falling off the economy.”
“The Conservatives have put all of our economic eggs in the (resource) extraction basket. So we don’t have the balanced economy, including the service sector, that we once had,” he told CTV’s Power Play Thursday.
While the Conference Board of Canada recently warned of a recession in Alberta if oil prices remain low, Oliver said global energy demand is expected to grow by 35 per cent over the next 25 years.
Meanwhile, it remains vital for Canada to diversify global markets for its oil, particularly in the wake of the discovery of vast shale oil and gas reserves in the United States, he said in Calgary.
"If we do not access new markets, our resources will be stranded and a huge opportunity will be lost," Oliver said.
Despite the fiscal challenges of low oil prices, the minister re-iterated his position that the government expects to achieve a balanced budget in 2015-16.
This year's deficit is expected to come in at $2.9 billion, Oliver said, followed by a balanced budget next year. After that, the budget surplus will steadily rise until it hits a projected $13 billion by 2019-20, he said.
"Lower oil prices will adversely impact our federal government's fiscal situation," Oliver said. "But the decline in oil prices will not prevent our government from achieving a budgetary balance in 2015-16."
He also said the government does not plan to increase taxes, and will remain focused on creating jobs and growth.
Liberal finance critic Scott Brison accused the government of simply trying to delay “a bad-news budget.”
"It's during times of uncertainty that we need a government that actually provides a plan and instead ... we're entering the next fiscal year without a plan," he said.
With files from The Canadian Press
