Budget Watchdog Suggests More Federal Action To Cut Ottawa Shortfall

November 3, 2009 3:06 p.m. EST

Ottawa, Ontario (AHN) - Canadian Parliament Budget Officer Kevin Page suggested that the federal government initiate more action to reduce the expected budget shortfall estimated to grow to $19 billion by 2013-14.

He said to get out of the structural deficit, Ottawa must increase taxes or reduce spending further. Page explained the current structural deficit is similar to the one that beset the Canadian government in the 1980s and early 1990s which persists over a long term despite a healthy and growing economy.

However, federal officials debunked Page's theory as they projected recovery within $5.2 billion of a balanced budget by 2013-14 because of economic growth that will bring in substantial tax revenue. Finance Minister Jim Flaherty added permanent structural deficits would be avoided since Ottawa has a strict plan to place a cap on spending growth to less than 4 percent yearly.