Balanced budget deferred until 2015 in Flaherty's new plan

Finance Minister Jim Flaherty blamed the European debt crisis for damaging Canada's outlook and says he will not be able to balance the budget by 2014-15 as promised in the last election campaign. In an economic update given to the Calgary Chamber of Commerce today, Flaherty said that the budget will not be balanced untill 2015, one year later than he had been projecting.

The government has raised its forecast for the 2012-13 deficit from $18.4 billion to $26.4 billion.

The country's debt-to-GDP ratio was 33.9 per cent in 2010-11, well below that of many major economies.

"The government is increasing the adjustment for risk to take into account these heightened short-term concerns and, for fiscal planning purposes, provide the cushion the still uncertain environment demands," Flaherty said on Tuesday.

A deficit of $15 billion is expected in 2013-14, followed by $3.5 billion in 2014-15 and a small surplus of $600 million in 2015-16.

"Canada’s key economic threats are not of our own making," Flaherty said, adding the economic uncertainty, principally in Europe, is a drag on the economy.

Flaherty also announced that the government is extending a work-sharing program that lets some employers hang onto skilled workers while they deal with money problems. Under the program, workers can drop to part-time hours and the government will top them up with Employment Insurance.

The work-sharing program is being extended up to 16 weeks for new, existing or recently ended agreements. About 15,000 Canadians are still taking advantage of the program.

Flaherty also cut in half the increase in EI premiums employees and employers are expected to pay starting Jan. 1, 2012.  EI premiums were set to increase in the new year by up to 10 cents per $100 for employees and 14 cents per $100 for employers. Those increases will now be capped at five cents and seven cents respectively.