* Crude price discount hurts federal revenues
* Flaherty says will balance budget by 2015
* No decision yet on infrastructure spending
By Randall Palmer
OTTAWA, Feb 6 Current discounted prices for
Canadian oil are slowing the growth of nominal gross domestic
product and therefore Canadian government revenues, Finance
Minister Jim Flaherty said on Wednesday.
Delayed pipeline projects and an excess of supply in
crude-rich Alberta mean Canada is forced to sell some heavy
crude at a deep discount to world prices, although that price
gap has recently narrowed.
Alberta, Canada's largest oil-producing province and the
largest foreign energy supplier to the United States, has
already warned of a C$6 billion ($6 billion) revenue shortfall
in its provincial budget as a result.
Now the federal Conservative government says it too will
take a hit.
"It is obviously a concern, not only in Alberta, but in our
government ... it affects our budgeting because it affects
commodities prices, obviously, which affect the level of nominal
GDP, which affects federal revenues," Flaherty told reporters
after a speech.
The price discount on Western Canada Select heavy blend
narrowed to its lowest level in 12 weeks on Wednesday: to $26.75
a barrel under benchmark West Texas Intermediate after months of
discounts that at times topped $40 a barrel.
Flaherty, who is expected to deliver the next federal budget
in March, also said he sees no need to provide additional
stimulus to the economy and stuck to his plan to eliminate the
government's relatively small deficit by 2015.
Canada lurched into a fiscal deficit during the global
financial crisis after a decade-long string of surpluses. Last
November, Ottawa estimated the shortfall for the 2012-13 fiscal
year at C$25 billion, before adjustments for risk, or about 1.4
percent of the size of the economy.
Ottawa is so far relying on spending cutbacks and economic
growth to help balance the books in time for the next election.
In the May 2011 election campaign, Prime Minister Stephen Harper
promised new initiatives in the future such as income-splitting
for pensioners, conditional on a budget surplus.
The government has not yet decided whether to boost spending
on infrastructure beyond an existing plan that is set to expire
in 2014, Flaherty said on Wednesday.
Officials have said next month's budget could include
infrastructure measures, possibly by extending the life of the
C$33 billion ($33 billion) Building Canada plan, which the
Conservative government introduced in 2007.
"I must say that no decision has been made in terms of a
future infrastructure plan, but any decision will be made in the
context of our current fiscal situation," Flaherty said in the
prepared text of a speech.