Finance Minister Oliver says low oil prices have been considered in forecasts

TORONTO – Despite widespread concern over possible fallout from the dramatic slide in oil prices, federal Finance Minister Joe Oliver gave assurances Thursday that Ottawa had already factored lower oil prices into its fiscal forecasts.

“When we took into account the oil price decline, which had already occurred, we made the assumption that the prices would stay at the low level for the entire period,” Oliver told a media availability conference on Thursday.

Oliver said that’s “a relatively conservative assumption and we’ll continue to monitor the level of prices.”

The finance minister’s comments were delivered shortly before the OPEC oil cartel announced it would maintain production at current levels despite the oil glut on world markets that has contributed to a more than 30 per cent drop in prices from US$105 a barrel last summer.

American markets were closed for U.S. Thanksgiving on Thursday, but in electronic trading on the New York Mercantile Exchange benchmark West Texas Intermediate crude had tumbled $4.64 to a 4 1/2-year of US$69.05 a barrel.

While Oliver declined to discuss the direction of oil prices, he said that he believes “the major risks to Canada are external.”

The finance minister spoke to the media Thursday ahead of his first pre-budget consultation roundtable in Toronto that included members of Canadian banks, the mining industry and other special interest groups, as well as representatives from technology companies like Facebook and Air BnB.

Over the next few weeks, Oliver will visit seven other cities across the country — including St. John’s, N.L., Quebec, Calgary and Vancouver — for further consultations.

While Oliver has promised to focus on job growth, the federal government will post a surplus of just $1.9 billion in 2015, $4.5 billion short of earlier projections due primarily to a round of new tax cuts and benefits for families with children.

The measures include a boost to child care benefits and a controversial $2-billion-a-year income-splitting plan for couples with children.

Oliver and the finance department have mostly refused to address the specifics of the new family-friendly tax and benefit package that will carve out an estimated $27 billion from public coffers over six years.

“The total package would impact positively on every single one of the Canadian families with children, which is over four million,” he said, before abruptly ending the media conference.

Critics have argued the family tax break would only affect about 15 per cent of households while leaving many other Canadians out in the cold. The Liberals have promised to undo the income-splitting proposal if they win next year’s election.

During the cross-country consultation meetings, housing prices are one topic that will likely be discussed, though Oliver has reiterated his stance that Ottawa won’t be taking any action to protect the market.

“We certainly do not believe that the current situation merits any major moves,” he said.

“The longer-term objective is to gradually reduce taxpayer exposure to the residential real estate market, but we have no specific plan.”

Oliver says the government’s long-term aim is to gradually reduce taxpayer exposure to the residential real estate market. His predecessor, Jim Flaherty, moved four times to tighten mortgage lending rules in an effort to cool a hot real estate market.

The minister’s comments follow an IMF warning on Wednesday that the housing market and household debt represent key risks to the Canadian economy.

An IMF official estimated Canada’s housing market was over-evaluated by roughly 10 per cent on a national scale, although in some regions those estimates could reach as high as 20 per cent.

The IMF predicted a soft landing for the housing market, but warned Canada could be at risk of a sharp correction if interest rates rose too quickly and the job market suffered a downturn.

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