The federal government will be back in balance in little more than a year and run a surplus from that point on, Finance Minister Jim Flaherty said Monday in generally upbeat testimony about Ottawa's books to the Senate finance committee.

"We will be balanced again in approximately 14 months and we'll be in a position to run a surplus and make the policy decisions that are made then about what to do about the surplus," he said.

The Harper government is counting on balancing the budget in 2015 in order to fulfill campaign promises made four years earlier that it would introduce partial income splitting for families among other tax cuts once the deficit is eliminated.

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Flaherty has pledged to meet the target in the past, but the 14-month deadline was his most specific to date.

However, speaking later to reporters, he said his outlook is that the budget would be balanced sometime during the fiscal year 2015-16, not specifically in March, 2015.

In his latest economic update, Flaherty forecast a surplus of $3.7-billion in 2015-16, but also gave himself some flexibility by including a $3-billion cushion, meaning the surplus could actually be almost double the official projection.

Some analysts have suggested that Ottawa may already be in the black – based on the monthly reporting – by the time Flaherty or some successor presents the 2015 budget.

The minister was also relatively optimistic about the outlook for Canada's auto sector, arguably Ontario's most important industry and a key sector in the economy as a whole.

Responding to a question about the government's remaining stake in General Motors, he said he was waiting for a good price before selling, boasting that he had got a better price than the United States earlier this year by waiting.

And he said he believes the future of the industry will be bright, adding that the Canada-European Union free trade deal, once it is implemented, will offer the domestic industry an opportunity to expand.

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"This business has come back, it's a global business … and we're seeing companies now design cars for the European market, including right-hand drive cars, and they will export cars from Canada to Europe," he said.

"This is a huge development and it puts us into the global marketplace, which is a good place to be."

Later, he explained that "at least one" of the Canadian assembly plants will build cars for Europe, and that CETA, as the trade deal is called, will encourage further expansion into the market.

Under the agreement, Canada will be able to sell up to 100,000 cars duty-free in Europe – more than 10 times current shipments.

In other testimony, Flaherty said he was somewhat concerned that departments have under spent to the tune of about $10-billion a year on their approved budgets, saying in particularly that procurement spending was "slow." But he also told reporters that "it was good" the government was saving money.