According to the Canadian Press, a new analysis by the Conference Board of Canada indicates that the Harper government “will easily manage to avoid slipping into a deficit position despite the slumping economy and will almost certainly record higher surpluses than forecast.”
The Conference Board says that higher-than-projected inflation, along with other factors, have boosted government revenues and almost completely offset the impact of slower growth and tax cuts that went into effect in January.
“Federal revenues should have been down nearly $20 billion in the first quarter, given the measures set out in last fall’s economic statement,” said chief economist Glen Hodgson. “Instead, only a ($1.1 billion) reduction is showing up in the national accounts” for the first three months of the fiscal year.
The Board’s report concludes that this “will create scope to pay down debt, reduce taxes, and/or introduce targeted increases in spending.”
Needless to say, while this highly optimistic outlook is an absolute godsend for the Conservatives, it’s a hellish kick in the nuts for poor old Stéphane Dion. Should be fun watching Liberal bloggers try to spin this one.