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The falling crude prices are expected to erode the budgetary balance by $500 million in the current 2014-15 year and $2.5 billion per year in the 2015-to-2019 period.

For planning purposes, the government is also using today’s average combined price of international Brent crude, Western Canadian light and Western Canadian heavy oil (currently about $70) as its average price for forecasting over the next few years.

Jack Mintz, director of the School of Public Policy at the University of Calgary, said he expects oil prices will likely increase within the next year, which could alleviate some of the fiscal pressure.

“The risk on oil, on a longer-term basis, on a medium-term basis, I don’t think is as strong as one thinks. In fact, I think there’s probably more upside than downside now,” Mintz said in an interview.

“Finance (Department) always tries to be prudent in their forecasts, and tries to be kind of pessimistic so that if you do get good news, you always do better.”

The family tax breaks could also buoy the economy, he said, as Canadians will have more disposable income in their pockets.

NDP Leader Tom Mulcair said the government can easily spin the numbers in the economic update in a way that benefits the Conservatives in the next election.

“We’re now in an election year, so nothing that Mr. Oliver said today is actually going to have to be measured against the real world,” Mulcair said.

Mulcair is vowing to fight the Conservatives’ income-splitting proposal, which he says is “taking from the poor to give to the rich.” Mulcair said an NDP government wouldn’t touch personal income taxes, but argues corporations aren’t paying their fair share.

Trudeau said the government is being “fundamentally unfair” by spending billions in surplus money on an income-splitting plan that will only help a small portion of the population, mostly wealthy Canadians.

jfekete@ottawacitizen.com