Fun with federal finance - Macleans.ca
 

Fun with federal finance

Notes on the budget, the cuts and the surplus


 

Scott Clark and Peter DeVries consider the nature of the projected surplus for 2015-2016.

… little detail has been provided to date on the restraint measures introduced in previous budgets. Many of the announced savings were to come through “efficiency” savings. The Parliamentary Budget Officer requested details on the impact of these measures with little success to date. How often can one go to the “efficiency well” before they find out it is completely dry? How confident is the government that these new savings can be realized? The estimate of the savings from “freezing the operating budget” is very uncertain.

Finally, Minister Flaherty is counting on asset sales, generating $1.5 billion in 2015-16. From our experience, such sales should only be booked when they are realized and not before. Previous governments have included asset sales in their fiscal plans only to find out that they were not achieved.

And Stephen Tapp looks closer at the government’s cuts.

Viewed in isolation, these recent spending cuts are modest. But the cumulative impacts of all restraint taken thus far will undoubtedly be felt over time. Some worry that even though the cuts may barely get noticed by the public today, they must eventually. At some point, they fear, after you cut away all the fat, you eventually hit muscle. And then bone. Death by a thousand cuts. Slowly boiling a frog. It’s happening one budget announcement at a time…

… digging into the numbers confirms that the vast majority of fiscal consolidation comes from the spending side, representing more than three-quarters of the total. While this isn’t surprising, the incremental nature of the spending restraint likely is (see attached graph, Federal Spending Restraint Measures Since Budget 2010, billions of dollars). Notice how this second restraint phase of the government’s Action Plan wasn’t announced in one shot; rather, it was done gradually, in a budget document here, an update there. As a result, spending was tightened, slowly, but significantly over time.

In other news, Global tallies the amount of money the federal government managed to not spend in the last fiscal year, an issue that the Parliamentary Budget Officer suggests MPs might investigate.


 

Fun with federal finance

  1. The Harper Government’s budget numbers are meaningless. They refuse to comply with international standards for budget transparency. After Kevin Page, it looks like the PBO has just given up on its requests for public budget documents.

    A recent report from the AG says Harper hasn’t set aside enough money to fund his $38B navy ship building project. This kind of creative accounting of under reporting costs means it will be up to the next government to sort through the mess and find out what the actual numbers are.

    Flaherty pulled the same kind of crap in ON. Said a $5.6B deficit was a “balanced budget.” Leprechaun with a magic pot of gold…

  2. It would appear the Flaherty is up his old tricks. Referring to one-time windfalls as an operating surplus is a great recipe for generating a structural deficit. I think he has some experience with making that happen.

  3. OK, we get it. Some people want the government to spend more money. But that’s not what they were elected to do. They were elected to balance the budget, and restrain spending. Get over it Liberals.

    • Hear that sonic boom Rick? That’s the point flying over your head.
      The issue here is that THE GOVERNMENT asked for the money to spend, and didn’t spend it, but can’t tell us why or where it went.
      It by-passes every control and measure in the system. You’re only supposed to ask for money you are going to spend, and the spending is supposed to be accountable!
      In your comment you seem to want the government to spend less and be more accountable. What they’ve done here is take more than they needed and refuse to comply with basic accounting principles.
      You okay with that?

  4. “…Minister Flaherty is counting on asset sales, generating 1.5 billion in 2015-16. From our experience, such sales should only be booked when they are realized and not before. Previous governments have included asset sales in their fiscal plans only to find out that they were not achieved.”

    As I predicted many months ago, the little leprechaun is basically operating the same shell game he ran in Ontario to mask a 6 billion deficit. Fortunately, the voters here threw him out before he could do any more damage.

    • I like this idea that you Liberals like to repeat about how certain income shouldn’t be counted as income on a budget. You think the government’s capital expenses should just evaporate into thin air?

      • I’m not a Liberal but, yeah, you’re right about one thing. Sound accounting principles and fiscal prudence are definitely not common among Cons