Harper holds to prediction of budget surplus for current fiscal year

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The Globe and Mail is hosting a debate on the economy among the leaders of the three main political parties on Thursday at 8 pm (ET). Click here for more details.

Stephen Harper is trying to shift the focus of the federal election campaign back to the economy – the ballot question where the Conservatives feel strongest – building on news from the Finance Department Monday that Ottawa recorded its first annual budget surplus after six consecutive deficits.

The fiscal year that ended March 31 is the first time the federal government's books have been balanced since 2007-08, the year before Ottawa began deficit-spending in response to the global financial crisis.

On Monday, the treasury reported a $1.9-billion surplus for 2014-15, a result Mr. Harper held up as the fruit of his government's "careful economic stewardship."

The Conservative Leader is doggedly sticking to his prediction of budget surplus for this current fiscal year, as well, despite weakened oil prices and predictions by economists to the contrary. "I see zero to little risk we will have anything other than a surplus for the second year in a row, based on the trajectory we are on," said Mr. Harper, in Kamloops, B.C.

The Conservatives are using the halfway point of the campaign to reboot their election effort, bringing it back to the economy after it was derailed by the Mike Duffy trial and the refugee crisis.

To that end, the Tories released a suite of new campaign ads bearing the slogan "Protect Our Economy" in an effort to distinguish their tax-cutting, less-government-is-better approach from the NDP, which has promised to balance the budget but raise corporate taxes, and the Liberals, who are pledging a massive investment in infrastructure and will run three more years of deficits to pay for it.

Public-opinion tracking suggests the race has once again tightened, with Nanos Research reporting Monday that for the fourth night in a row of polling, the Conservatives, NDP and Liberals were in a three-way tie.

Conservative insiders say the pivot to the economy follows the well-worn Harper campaign playbook, despite the fact that his economic stewardship credentials may be a bit frayed after nearly a decade in power.

Mr. Harper hasn't changed his campaign theme song in three elections – Better Now by Collective Soul – and the same goes for the habitual effort to style himself as Mr. Low Risk when it comes to deficits and taxes. "I haven't seen him innovate yet," one insider said of Mr. Harper's electioneering routine.

As they refocus, the Conservatives are preparing a bid to gain the upper hand on the Syrian refugee crisis, as well, after being criticized for a tone-deaf response immediately after the Sept. 2 photo of three-year-old Alan Kurdi lying dead on a Turkish beach. The government is readying a package of measures to speed the intake of asylum seekers and, refugee groups expect, possibly increase the overall number that Canada will commit to taking. Other measures are expected to include beefing up staff in Canada's Lebanon and Jordan offices to speed processing, perhaps loosening the red tape affecting private sponsorships organized by five or more Canadians and helping citizens who want to sponsor refugees.

It may ultimately be a government minister, rather than the Prime Minister, who will make the refugee announcement as the Tories say they prefer to keep Mr. Harper on an economic message. The three major party leaders are preparing for The Globe and Mail leaders' debate this Thursday in Calgary and it will focus entirely on the economy.

Timing is everything in politics and the good budget numbers have certainly come at a fortuitous time for Mr. Harper.

The federal Annual Financial report that came out Monday is normally made public in October or late September. Finance Minister Joe Oliver's office said the Conservatives had no influence over when it was released this year, saying before the writ dropped Mr. Oliver had authorized the department to release it when it was ready, rather than waiting until after the election.

Rival parties are divided over whether to balance the books. NDP Leader Thomas Mulcair said Monday's report is "good news for Canadians" and he portrayed it as evidence that his party can in fact balance the books while delivering on promises to boost spending on day care, health care and infrastructure.

The NDP is expected to release a detailed costing of its promises later this week, an accounting that will also show how it intends to pay for its pledges, including the size and timing of a hike to the corporate tax rate. The document will not be a full party platform.

Mr. Mulcair took a jab at Liberal Leader Justin Trudeau, who is competing with the NDP to win over Canadians who are looking for a change in government.

"As good, prudent public administrators, you don't add tens of billions of debt on the backs of future generations during an election campaign. Justin Trudeau's short-term thinking is a thing of the past as far as we're concerned," he said.

Mr. Trudeau is promising a 10-year, $60-billion infrastructure spending plan, which he plans to pay for by running three years of deficits before balancing the books.

In response to Monday's figures, Mr. Trudeau accused the government of making painful cuts to government spending last year in order to reach the political target of balancing the books. He said this approach contributed to the technical recession that was reported in the first half of 2015 and he argued that this year's figures are on track to fall back into deficit, citing a report from the Parliamentary Budget Office.

"Mr. Harper worked hard to try to balance the budget last year in time for the election by cutting program spending to Canadians who need it, whether it's our veterans, our seniors, or First Nations or help for [Citizenship and Immigration] to bring in immigrants and refugees," he said. "But of the different deficits out there, the fiscal deficit isn't the one that concerns Canadians, and certainly doesn't concern economists all that much. It is the infrastructure deficit that is so concerning to so many people. That's what's slowing down our growth."