Spending Restraint Key to Balancing Ottawa's Books: C.D. Howe Institute

TORONTO, Feb. 18 /CNW/ - Spending restraint is key to achieving a balanced federal budget over the next five years and should form part of Ottawa's March Budget, according to the C.D. Howe Institute. "Back to Balance: A Shadow Federal Budget for 2010" demonstrates how to limit the rise in the federal debt by prudently reining in spending growth rather than raising taxes, so that past and pending improvements to the nation's tax competitiveness are not erased.

The study notes the 2008/09 recession, and the government's fiscal responses to it, delivered a massive setback to Ottawa's bottom line. Ottawa estimates that deficits this fiscal year and next will add more than $100 billion to the net federal debt, effectively erasing past budget surpluses. Restoring this balance will be critical to the prospects of all Canadians, in the face of the massive wave of demographic change that confronts the nation, the authors argue.

In this year's Shadow Budget, authors Alexandre Laurin, Bill Robson, Colin Busby and Finn Poschmann, all of the C.D. Howe Institute, urge a return to budgetary balance by 2014/15. They favor spending restraint over tax increases to ensure Canada's hard-won international tax competitiveness is not eroded. Sensible, fair, and efficient measures for expenditure reduction include raising the employee share of federal pension contributions from 32 to 50 percent, limiting growth in federal transfers to the provinces beginning in 2014, and reducing subsidies to Crown corporations.

For the study click here. http://www.cdhowe.org/pdf/backgrounder_127.pdf

For further information: Alex Laurin, Senior Policy Analyst; Colin Busby, Policy Analyst; C.D. Howe Institute, [phone]