How to cut $20-billion from spending without really trying

Andrew Coyne solves the budget crisis

My colleague John Geddes has written a sensible, sobering article explaining just how difficult it will be for the government to balance the books solely by cutting spending, ie without raising taxes.

Yet the notion that layers of glistening blubber are just waiting to be hacked off is only a comforting delusion. There must be fat, sure, but the federal books are well marbled—the less-than-unassailable spending tends to be finely integrated into essential programs. No use pretending that finding savings huge enough on their own to balance the books again is merely a matter of will.

In fact, some of those most experienced on the subject think the task impossible.

Impossible? Impossible is nothing. It’s true, as John suggests, that it can’t be done just by cutting “waste, fraud and duplication”: not because it isn’t there, but because governments aren’t very good at getting at it. Another round of “expenditure review” isn’t going to do the trick, any more than the last several rounds did. But make some fundamental choices about what government should and should not be doing, be prepared to tackle a few entrenched interests, and the task looks quite achievable.

Suppose we were to try to erase the deficit in four years, that is by fiscal 2014. The timetable seems reasonable, as that is the period over which the Parliamentary Budget Officer reckons the cyclical component of the deficit would have been retired by economic growth, leaving only the structural component, which he estimates at $19-billion. So to wipe that out without raising taxes, the government would need to cut about $20-billion out of spending — not from this year’s projected total of $273-billion, but from spending in 2014, projected to be $296-billion. (Where did I get that number from? See page 22 of the September fiscal update, where the government’s five-year spending track is laid out.)

For simplicity’s sake, assume there is nothing we can do about the government’s biggest single spending program, interest payments on the debt — forecast to explode from just under $31-billion this year to $42-billion in 2014. So that means we have to cut $20-billion out of $254-billion in program spending. The $234-billion target that implies is $8-billion less than we’re on track to spend this year. Sounds tough. But this year’s figure is inflated by the enormous surge in one-time spending rushed out the door in the name of stimulating the economy. A better comparison would be with last year’s total of $208-billion. The 12.5% increase in spending this implies between 2009 and 2014 is just slightly more than the combined increase in prices (6.1%) and population (5.3%) projected over the same period.

So the task, in other words, is to hold spending more or less level in real per capita terms, that is after adjusting for inflation and population growth, with where it was last year. That’s hardly savage: In 2014, the government would still be spending the same amount of inflation-adjusted dollars per citizen as it spent in 2009 — which was 25% more inflation-adjusted dollars per citizen than it spent in 2000.

Can it be done? Start with Transfers to other levels of government. The Harper government has promised not to cut these, or not to cut them much. Yet these have been among the fastest growing items of federal spending in recent years, rising from $29-billion in 2004 to $46.5-billion in 2009. By 2014, they are projected to rise to nearly $60-billion, a 28% increase. Suppose instead these were held to the same inflation-plus-population escalator I’ve suggested for the rest of federal spending. On its own, that would shave $8-billion off federal spending, without reducing the real value of per capita transfers by a nickel.

Still, the provinces would squawk. So let’s go easy on them. Let’s just hold transfers level as a percentage of GDP. Instead of growing by 12.5%, as under the inflation-plus-population rule, they’d be allowed to grow 16%, in line with projected GDP (from $1.609 trillion in calendar 2008, my proxy for fiscal 2009, to $1.862 trillion in calendar 2013). They wouldn’t actually be cut, you understand. They just wouldn’t grow quite as fast as planned. That still yields $6-billion in annual savings four years out.

Next, look at Other operating expenses (under the heading “Direct Program Expenses”), which measures the federal government’s own internal departmental spending. At present, this is scheduled to rise from $61.5-billion in 2009 to $78-billion in 2014. Hold the increase to inflation-plus-population — capping wage increases at 2% per year, for example — and you save roughly $9-billion. But the unions would squawk. So hold it to the less stringent GDP-growth track and save about $6.8-billion.

Okay. That’s about $13-billion we’ve saved so far. Where do we find the other $7-billion? Easy. Let’s dive in to the Crown corporations line item, pencilled in at about $7.6-billion in 2014. (Warning: you’ll need a pencil, a calculator, and a copy of part I of the Estimates for this next bit.) I’ll take it as read that the $2-billion annually for Canada Mortgage and Housing Corp. is inviolable, especially in present circumstances. About $1-billion of what remains is for the CBC. As I’ve often argued, it is long since time the corporation was supported by its viewers, rather than the taxpayers. Put the main English and French television networks on pay, and you could save at least half that amount, or $500-million. Via Rail and AECL should likewise be put on track to full cost recovery in four years, which would save another $500-million.

That leaves us with that inviting grab bag known as other transfer payments, some $33-billion in all (in 2014). These are not spending on federal programs, but transfers to others — much of them to private industry, wher they distort economic choices and reward corporations for failing in the marketplace. There’s good reason beyond budget stringency to want to put a stop to this.

Start by shutting down the “regional development” slush-funds — ACOA, EDAC-ROQ, FEDNOR, WEDC, and whatever we’re calling the southern Ontario thing — and you save about $700-million in transfer payments (in addition to about $250-million in operating expenses).

Next, take a look at the five big granting departments: Agriculture, Heritage, Industry, Natural Resources and Transport. Between them they dispense about $9-billion in transfers and subsidies of one kind or another. Of that amount, roughly $1.5-billion takes the form of explicit handouts to private industry (see the Public Accounts, Volume III, Section 6) which suggests that would be a good intitial target for savings. But if you really want to have some fun, have a stroll through the detailed list of transfer payments in the Public Accounts, thousands and thousands of them in all just to list the grants and contributions over $100,000 takes 289 pages of 6-point type. Not only do you come away with the firm impression that every company, organization and community group in the country is on the federal take, but there must surely be another $1-billion that could be carved out of this, just by occasionally urging a little self-reliance on the recipients. And I’m being kind.

That still leaves us about $3-billion short of our $20-billion target. But there’s a whole area of spending we haven’t considered: the billions in spending delivered through the tax system, in the form of credits and exemptions, known as “tax expenditures.” (Finance reckons the cost of these here.) A prime candidate for the chop would be the old age tax credit, now worth more than $2-billion annually. Neither income-related, like the Guaranteed Income Supplement, nor contributory, like the Canada Pension Plan, this is simply free money, paid out to everyone rich or poor, above the age of 65, at the cost of everyone, poor or rich, under. That makes no sense. The credit should be folded into an enriched GIS, at a savings of, say, $1-billion.

Throw in some of the more egregious departures from tax neutrality among the remaining credits — the $120 million subsidy to Labour Sponsored Venture Capital Funds, $365 million to give a lifetime capital gains exemption to farmers and fishermen, $635 million to do the same for small businesses, the $255 million favour to the resource industries through so-called “flow-through” shares, $300 million in tax credits for movie producers, $255 million in special investment tax credits for Atlantic Canada, and so on — and we’re done.

Bear in mind that we’ve really only gone for the low-hanging fruit here. We haven’t touched the $26-billion that goes out the door every year in Old Age Security — like the old age tax credit, it is given out to everyone rich or poor, just because they’re old. Neither have we broached the subject of reforming our unwieldy $22-billion employment insurance system. Whether we will be able to continue to overlook these programs in the years and decades to come, when the fiscal crunch, driven by the aging population, grows more acute, is an open question. But for now we’ve spared them altogether.

As we have much else: neither the $6-billion in transfers to native bands, nor the $3.3-billion in CIDA grants comes under the knife here, though both are widely considered rife with mismanagement, on the theory that people would prefer to see any savings achieved through reform put back into these programs. Likewise, some of the larger tax expenditures, such as the inclusion rate for capital gains, the charitable tax credit, or the zero-rating of groceries under the GST, await more comprehensive reform exercises. For now, we have focused on cutting only the most obviously and overtly harmful spending.

To sum up: hold provincial transfers and departmental spending to about 3% per annum (from 2009 levels); shutter the regional development agencies, make the larger Crown corporations pay their own way, close the corporate welfare spigot — in a word, desubsidize the economy; and enforce some basic principles of fairness and neutrality, and you’re there. As it turns out, the burden is neatly divided into three, roughly equal parts: one-third from the provinces, one-third from the feds, and one-third from everyone else.

There. That wasn’t so hard, was it?

UPDATE: If you want to see what real fiscal conservativism looks like, the Canadian Taxpayers Federation has a plan to balance the budget in three years, rather than the pallid four-year plan outlined here. They’d slash spending all the way to $214-billion by fiscal 2013, including cuts of roughly $5-billion in “grants and contributions,” twice as much as I’ve included.




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How to cut $20-billion from spending without really trying

  1. Would you prefer your effigy to be burned alongside Harpers or separately?

  2. Coyne has it all figured out, and you didn't even need to prorogue to do it!

  3. I regret that I have but one effigy to give for my Finance department.

  4. "like the old age tax credit, it is given out to everyone rich or poor, just because they're old. "

    One difficulty you're going to run into here is that if you means test *everything* for seniors, you're going to create hellacious marginal tax rates (possibly over 100%). Lots of people continue to work past 65, but we can kiss that goodbye if effective marginal tax rates are at 120%.

  5. There's more leadership in one of these paragraphs than in all our party leaders' heads put together.

  6. LOL if these suggestions are actually put into place, and the source of them becomes widely known, we could be talking production line!

  7. Very funny paraphrase Andrew!

  8. Andrew, I respect your political opinions greatly, but an economist you are not.

    • Chris, I don't know you well enough to respect your opinons but …….

      ……. Mr. Coyne is a graduate of the University of Toronto and the London School of Economics.
      perhaps he does.doesn't consdier himself an economist but one would think he know of which he speaks

  9. That's why I've tried not to overestimate the savings. To keep the clawback rate gentle is expensive, though precisely how expensive I don't pretend to have calculated.

  10. Leadership is easy.

    It's good leadership that we'd like.

    • Sure, good leadership, not just leadership, that's certainly not an unreasonable request.

      But Coyne's budget shouldn't be dismissed outright; you couldn't support any of it?

  11. Yeah, but his kitchen is a mess. Multi-tasking is tough!

  12. That's such a lie. My kitchen is immaculate. Barren, even.

  13. They are not low-hanging fruit so I am a bit off topic but I would abolish public sector unions. I have been reading about California recently, and a few other states, and they are going bankrupt because of unions and their demands. Canada is not as far along down the road of bankruptcy as Cali is, obviously, but we are headed that way.

    Until someone gets control of salaries paid to public sector workers, our costs will continue expanding. More than 50% of Fed and Prov budgets is spent on salaries, benefits and pensions.

    • GOOD idea. Even the suggestion of taking away the workers right to organize and associate will send you right wingers back to your corner. While it's fair game to debate the effect labour unions have on publicly paid salaries, it's completely ridiculous to call for their abolishment. Guess what? I call for the abolishment of right wing think tanks.

      I never understood the mentality of people who want to drag those who are making a fair wage for their work down to the level of those who are being treated like slave labour. Wouldn't you prefer to elevate the underpaid to a living wage rather than drag everyone else down? It makes no sense to me. Maybe YOU need a union.

      • I'm not for aboloshing unions, but I do think that closed shop rules (e.g., the Rand formula) are inherently coercive. If someone wants to join a union, fine. If someone doesn't want to, why should they be forced to join? But the real point is this: is it fair for public sector unionized employees to have cadillac-level benefits, including generous pensions, funded by taxpayers, when the vast majority of those taxpayers don' t have such benefits and don't have such pensions?

  14. You do realize that you're using growth estimates from the government and then ripping out the funding from several areas which will basically drop them into a secondary recession at a time when there's already no shortage of unemployment?

    Hell, go ahead and attempt to privatize the CBC and various other institutions.. and then watch as all those old employees stop spending and start looking for jobs, depressing the market even further and raising your unemployment insurance costs even higher.

    Yeah.. that'll work, I'm sure.

  15. Makes sense – and there are already people in Canada who pay marginal tax rates that high. What's really needed is to get rid of all these little programs and replace them with a negative income tax/guaranteed annual income, but that's a separate issue.

  16. It would be worth trying this for one simple reason alone….

    Who wouldn't want to watch Jack Layton's head explode?

  17. Mr. Coyne, you are doing serious damage to your certified reputation as a liberal shill. Please stop.

    • Coyne's no Liberal, never has been. I know Coyne is a Conservative because his cost cutting list makes my blood boil. But, at least he's a REAL Conservative, unlike the government of the day who are more than happy to be the highest spending government in history…spending your money to try to buy your vote. Being a real Conservative doesn't mean parroting the government and Coyne was one of the first in a growing list of Conservative columnists who had the balls to call Harper out when he deserved it.

      MY list would start with cutting all advertising dollars to promote the economic stimulus package. Latest round is 34 million….not small potatoes when you add it to the many millions already spent. Second, MP's will take a voluntary 10% pay cut and cut office and travel expenses by 20% without laying off a single worker (yes, you too can travel coach like the rest of us).
      After they've walked the walk, then let's talk about what Canadians can give up to slay the deficit. That GST cut looks stupid now doesn't it? Ok, it looked stupid then too, but now it looks REALLY, REALLY stupid.

  18. I don't know about abolishing them, since they do serve as a useful organization for proper dialogue on employer/employee relations and in the absence of unions, my experience is that even benign dictators are still dictators, you know? However, I would suggest a "redo" of many of the factors that seem to feed off of one another to make union gains go viral. They seem to cherry pick results from one contract or the other, without the context of how those results may have been achieved and then insist on them as the new baseline. It seems to feed a never ending, upwards spiral and I agree that as much as not having them would result in a bad balance, the status quo is also out of balance.

  19. This is a set of solutions that is more-or-less in line with conservative principles. Which means that our "Conservative" leaders will never, never, never have the stones to enact them.

    As long as we're suspending considerations of realpolitik, why not just return the GST to 7%? My gut says (I have no idea how to get to hard numbers on this) that the economic consequences wouldn't be substantially worse than the impact of the cuts described here. It's quick and simple, doesn't hurt the provinces (most of whom can't take a cut or decline in transfer payments right now) and doesn't specifically enrage voter blocs like the aging baby boomers.

    That also might not be $20B in new revenues, but it would solve the bulk of the problem.

    • I would argue that raising the GST back to 7%, in annual 1% increase of course, would be even less harmful than the cuts described above. The rationale for that statement is that the decreases, which took place during boom years (when disposable income was at a high and thus the extra incentive to spend should be the most effective), had little positive effect. So, raising the rates during a time of recovery (when disposable income is at a low and thus the extra incentive to save should be most effective) would likewise have little negative effect.

      Overall though, the impact of all Coyne's suggestions (with one glaring exception that most posters have picked up on) should be pretty minimal. There's a few broad cuts that, upon close inspection, probably couldn't be so large without risking economic backlash, but a GST rise of even 1% should handle that. The big exception, of course, is the transfers to provinces – they're in debt right now and many are likely to stay that way for some time. Cutting transfers is essentially just moving debt from the federal government to the provinces, which solves nothing for the majority of Canadians.

      Also, moving the GST back to 7%, if done by 1% per year starting in even the 2011-2012 fiscal year not only helps to eliminate the deficit in 2013-2014, but reduces the accrued debt from now until then substantially (basically eliminates the structural part of the deficit in 2012-2013 and cuts it in half the year before). That means fewer debt payments and a lower overall public debt burden to deal with before the next recession.

      • Do both. Incrementally slide the GST back up AND cut the crap that Andrew has outlined. Balancing annual books still does SFA about retiring the debt…

  20. Now comes the easy part, he has to get elected on that platform…a clean kitchen might help a little :)

  21. According to Jocelyne Bourgon's Program Review: The Government of Canada's Experience Eliminating the Deficit, 1994-1999 – A Canadian Case StudyStudy, page 20, figure 9, the deepest cuts were made to Regional Agencies, then, Industry, Transport, Natural and Human Resources, Environment, Fisheries… Health received the smallest cuts in percentage, with Indian and Northern affairs the only department getting increases. Over that five-year period, total federal public sector employment declined by about 55,000

    Andrew Coyne is targeting the usual suspects.

    • And it took about 2years (2000-2002) for federal public sector employment to rebound and surpass previous levels.

  22. What 'proper dialogue'? All unions do is demand more money or go on strike. I say extortion, you say proper dialogue. We have laws for workplace safety standards, how many hours per work week, minimum wage … etc.

    I believe unions were necessary way back when but they serve no useful purpose now.

    • When was the last time a union representing federal workers went on strike? The insinuation of them abusing their ability to strike is misleading. Also, I can't remember any union negotiating to work fewer hours. To be compensated for overtime; sure. But to actually work less hours per week; no.

      I can agree with you that the adversarial nature of union-employer negotiations results can result in escalating demands. However, the only reason I think unions representing federal employees make some sense is to protect public servants from decisions being made for political reasons. You can trust business leaders to make decisions based solely on what makes sense for the company. You can't always trust a politician to make a good business decision.

    • A HUGE reason why California is going bankrupt is because any tax increases must be approved by referendum. Taxpayers there want more and more services but vote down the ability to pay for them when the bill comes due. This doesn't mean "tax increases are okay," but something's got to give when there is a crazy disconnect between the services demanded and the tax willing to be set for them.

  23. What about gradually adding back the two points of GST = ~$ 38 billion. Can't see why that will dampen the economy any more than removing the other tax credits on your list, or effectively constraining spending on healthcare and education which is what curtailing the growth in transfer payments will do.

    And if the sustainability of OAS is a concern, how about we first prevent companies from looting company pension plans, and force receivors to pay pension funds before creditrors? That will keep more people off OAS.

    Good luck with that whole revenue producing VIA Rail and AECL thing. In the case of the former that will cut train service everywhere but Ontario and Quebec (Or finish if off might be a better way of putting it)

    AECL should be allowed to meltdown completely on principle, but once it fails the massive bill for decommissioning and other hidden liabilities will come due. That won't amount to reducing expenditures in the near or immediate term, so it needs to stay on the other side of the ledger even if we do the right thing.

    • But nobody is "off OAS" – it is handed out regardless of income or contribution. That's the point. There are income-tied clawbacks, but they're pretty weak.

  24. There i was thinking that belonging to a union was a democratic right,freedom of assembly, freedom to organize – all that good stuff – not as worthy as freedom to form cartels and monopolies ? As for California's bankruptcy…i wonder what part absurd plebicites preventing any future tax increases, and tying the hands of pols, plays in that – just a educated guess mind you.

  25. I''m not sure economists have any more creditable knowledge on these matters than Coyne. What we are talking about has nothing to do with economic theory, but rather is about tradeoffs between different priorities (deficit reduction vs. spending). Economists and others may try to abuse their expert status to convince you one way or the other, but there really are no experts on the question of what a just society is, or whether one priority is better than another.

    The one exception might be on the consequences of rapid deficit reduction. It may be that such a fiscal contraction will be damaging to the economy. However, this can be offset. Belt-tightening raises short-term interest rates in the IS-LM model, giving the central bank more scope in which to make cuts to rates, offsetting the decline.

  26. While I hate ACOA (and equalization payments – the best equalization program for maritimers would be free plane tickets to Alberta), I am skeptical that it can be killed. Perhaps a better approach would be to adopt Scott Brison's strategy of shifting to a regional corporate tax cut (though that may just get Canadian firms to move to the maritimes – taxing Peter to pay Paul.

  27. "Sounds tough. But this year's figure is inflated by the enormous surge in one-time spending rushed out the door in the name of stimulating the economy. A better comparison would be with last year's total of $208-billion. The 12.5% increase in spending…"

    Sadly this is untrue. The September fiscal update from which "this year's figure" is drawn–as well as the PBO report–take into account the fact that a lot of this year's spending is stimulus related when calculating the spending and deficit figures in the out years. In other words, if you don't take into account the fact that a lot of this year's spending is one-time-only then the structural deficit is WAY more than $19 billion in 2014. In still other words, you're double counting.

  28. I don't know if I can get behind something that cuts $300 million in tax credits for movie producers (jk).

    While I have never been a Harper supporter I did hold out hope he would take a serious look at the books to find some areas that could certainly due with at least some trimming. I worried that there may be some significant cleavage in what he and I, and like-minded Canadians thought could use trimming in some instances, but I thought that it was necessary regardless. It has been thoroughly disappointing that he has made little effort. That we have had to wait for a serious effort to come from a journalist is doubly depressing.

    Nonetheless, this is very well done Andrew!

  29. Au contraire. If we eliminated brunch, or just harmonised it with lunch, we'd save >$700 million.

  30. During the last great contraction in federal outlays, 1995-2000 — an era when real per capita spending was cut by nearly 15%, not merely held level, as envisaged here — the economy grew 25% after inflation, or just under 4% per annum.

  31. Not proposing to privatize the CBC — just put it on pay.

  32. Obviously we could not abolish public sector unions. However, their rights should be more limited because their employers are not profit-motivated private firms but governments led by politicians who frequently indulge them for political gain. Public school teachers, academics, civil servants, etc should be allowed to unionize for effectiveness of communication, but their unionization should be limited to unions for individual employers (ie a York Univsersity faculty union could operate, but no CUPE) and teachers in particular should be made essential workers with no right to strike.

  33. What about those silly credits for beer and popcorn (i.e. children's sports, daycare allowance).

    Write another book your fiscal conservatives never fails to get me, as the french would say, excitant.

  34. There will be costs, as you mention, but ultimately high interest rates necessitated by large debt repayment would cause larger recessions. This is what happened in the 1990s.

  35. Well, this is a refreshing post. Pretty much every other journalist insists that only a tax increase will solve the problem, ignoring the reality that tax increases inevitably go towards vote buying and pet projects. Liberals are already mumbling about pension 'reform' and forgiving education loans.

    Coyne's suggestion should just be round 1 of spending cuts.

  36. Mr Coyne, thank you. Your analysis is precisely that which one can assume the government is doing right now as part of the PM's "recalibration". (and is an excellent reason for a prorogation of parliament). Who better than the current PM with his widely acknowledged analytical skills and decisiveness, to actually do something?

  37. The GST at 5% currently raises about $26-billion a year (net of credits), so unless I'm missing something raising it to 7% would only add about $10-12-billion in new revenues, not $20B.

  38. touché! although, i assumed, Coyne, as a rich, private sector type, could drum up resources to underwrite the cheque!

  39. "Whatever we're calling the southern Ontario thing" = Southern Ontario Development Agency, AKA, SODA

    Sorry, don't know what flavours it comes in…

  40. Rule one: the media never pays. See also: "freedom of the press."

  41. "Where did I get that number from? See page 22 of the September fiscal update, where the government's five-year spending track is laid out"

    Oh, that's right, suddenly Andrew "accepts" five year projections as reasonable and reliable.

  42. "AECL should likewise be put on track to full cost recovery in four years."

    Have you even bothered to look at AECL's books?

  43. Not a bad plan from the fiscal point of view, but I think Harper would be reluctant to make cuts in some of these areas in advance of gaining a majority government. For example, after getting his fingers burned on the whole culture thing, I can't see why they would mess with the CBC (which is a pity, it should have its public subsidy cut immediately). If VIA Rail could raise its own capital, we might just see a serious passenger rail system in this country some day, but going for 'full cost recovery' means cherry picking the best routes, cutting services and hiking up prices, not expanding the network and raising capital for infrastructure – it's the worst of all possible worlds. And I just can't see Harper cutting regional grants. Not in the current political climate.

  44. I usually don't jump in on these debates, but if financing the debt is our single biggest expenditure, one would think it would be fairly obvious to identify our biggest priority in fiscal policy: paying down the debt. This makes sense for two reasons, the first being that it pays for things we should have paid for years ago. The second is it lowers the interest payments on the debt, which is money we should be spending on other things, like health care or aid or what have you.

    I've always found it odd that some people treat the idea of government running a large surplus as something to be avoided, or as a sign the government is taking in more money than it needs to conduct its business. There's merit to this argument, but only if one ignores the (to me, at least) rather pertinent $510-ish billion elephant in the room we already carry as public debt. Doing so requires a degree of obliviousness I find myself incapable of sustaining.

    At this point, the argument over who caused the debt – which also seems to consume public debate on this file – seems to me to be a bit less important than how we're going to get rid of it. All of which is a long-winded way of saying thanks, Macleans, for at least sparking some debate on the issue.

    • Couldn't agree more. Even without spending restraint or higher taxes, the federal government stands to run operating surpluses as soon as 2011-2012. This year's deficit would be a very manageable 25 billion if we didn't have to pay debt charges, and half that next fiscal year. Even when we hit real surpluses, debt payments will account for over 12% of the federal budget unless it is paid down significantly.

      One in every eight tax dollars going to pay for things we already bought. That's unacceptable if only because it's largely unnecessary. And the scary thing is, almost every other country has it worse.

    • Absolutely right!!
      A couple of years of relatively mild hardship, along with an unshakable determination to PAY OFF THE DEBT, and we'd be well able to afford the necessary government services and subsidies. That so much of the money bled out of us in unconscionable taxes goes merely to SERVICING this debt, is insane.

      We citizens might bawl and whine but, if we want to live up to our duty to leave our country better for our children and grandchildren, we'd better tighten up and "just do it". Leaving the following generations nothing but debt and more debt ought not to be an option.

  45. Really? I was under the impression that responsible thing to do was to insist on having the media pay to shield any perception that their sympathies were being bought, if only to protect their reputation.

  46. Sure, cut Via Rail but not federal subsidies to airports and air lines. Because we love wasting enormous quantities of oil, emitting greenhouse gases, and submitting to insane security rules made up by the US government in violation of Canadian sovereignty.

    If the federal government had half a brain, it would build a Windsor-Toronto-Montreal-Quebec and a Calgary-Edmonton high speed rail lines yesterday. Forget Germany and Japan, Italy just opened one that travels at 4x the speed of a Via train (or car on the highway). We can do it too.

  47. Absolutely. So raise taxes in a generalized move instead of these local, focussed areas. Basically, spread the pain around so that each region sees less of it, giving them all a better chance to recover.

    The problem with these fairly focussed measures that Coyne is suggesting is that economies of scale work for economies as well. A lot of damage in a small area actually causes far more pain than a little damage over a large area.

  48. Make federal employees pay their pensions & not take it out of general revenue. Stand up to the power public service unions … too powerful — cut their wages 22% & freeze them for four years.

    • Government could cut the feet out from under powerful unions of all types simply by passing legislation that ensures a decent minimum wage with basic perks (pension plan, dental, eye care, etc.) FOR EMPLOYEES ONLY. Where is it "written in stone" that companies ought to be paying for an employee's family's needs? If the employee is PROPERLY paid, he/she can take care of these responsibilities easily. Some of the perks obtained by unions are outrageous! This costs us all dearly; does anyone think that such costs are not factored in to the price of the goods and services provided by these companies?

      When your neighbour boasts of his wonderful "package" from his government or company employer, who do you think is REALLY paying for that? Get your head out people, YOU are the one paying for everything!!

  49. You say tomato, I say tomato.. looks the same either way. Cuts of that size to a public funded institution, especially over a four year term (and that's assuming you didn't mean cut it all right now to get the interest benefits of doing such a thing) only happen with a massive transition in the organization.. which is corporate speak for "firing a whole lotta people"

    And besides, at least the CBC has the excuse of nominally being a "publically funded organization". Meanwhile, the tax credits that Roger's accures for running Maclean's magazine don't even have that excuse. Now I'll grant that you don't leave those out either.. that is, unless Roger's pulls in under 100k for it's tax credit… but we'll assume you're being fair there.

    However, all that is an aside from the main point — you cut that much funding which is currently going into people's pockets in the localized areas receiving them, and you put those areas into a significant recession — which hampers growth, which throws all your numbers out the window.

    • Much of what Coyne's suggesting can be laid off until the recovery is under way. I'm about as Keynesian as it gets and I do worry about implementing cuts too soon or too quickly, but nothing Coyne has proposed would push the country back into a recession. The most damaging element is the limiting of transfers and even that is a gradual cut that would only dampen growth, not cause a full-blown reversal.

      • I agree with that. Once the recovery is under way, then we definitely need to start controlling government spending (and raising taxes) to get our house in order again and to prepare for the next downturn. But Coyne is suggesting we do these things now, and I really don't think that we've seen any real recovery as of yet.

  50. By keeping spending on a 3% per year growth track? Even in the Keynesian fantasia, that's bollocks. The "cuts" I've outlined amount to 1% of GDP. Phased in over four years. I think the economy will survive.
    Also see my note above, which I'll repeat here for convenience:
    During the last great contraction in federal outlays, 1995-2000 — an era when real per capita spending was cut by nearly 15%, not merely held level, as envisaged here — the economy grew 25% after inflation, or just under 4% per annum.

  51. Quite right. So let's have an election on it: How should we balance the budget – by cutting spending, raising taxes, or both? I can't think of a more honourable, or fundamental, debate.

    • There is the holy grail: Let's have an adult discussion and debate on how to clean up the mess. And have a vote, and pray to whatever mythical supernatural being we like that the elected will live up to their pledges.

      That way, we will at least have earned the scorn of the next generation when Prime Minister Layton sends them the bill…

  52. Have a look at the cost estimates on that. Mind-blowing.

    • No prob. Just keep cutting elsewhere to make up for it. You said yourself you got to twenty bees without even trying, Choo-Choo!

  53. I hope that $700million blunch isn't going on the tapayers tab…oh i see it's a credit. That's ok then…can i come?

  54. Only as a starting point: I'm just trying to give people a sense of the relative magnitudes involved. And in fact I'm accepting the Parliamentary Budget Officer's critique that the Finance numbers are optimistic on the revenue side.

    • Why would reasonable people believe in this current government's figures when even in good times the figures where proven to be inaccurate when we were surprised by surpluses of the previous government? If Wall Street can be a proven scam why not entertain that government is cut from the same cloth?

  55. "I can't think of a more honourable, or fundamental, debate."

    Coyne A few comments here have got me thinking: Cons have said they prorogued government in order to focus on work in general but mainly crafting a budget. Aren't Cons kind of committed now to actually having to propose spending cuts or increased taxes?

    I wonder if all the democracy denied brouhaha will force Cons to do something about budget and stop with the airy fairy idea that budget will balance itself. It would also help with Con base who can't be too happy with their party at the moment.

    • That's a great point – let's hope we collectively hold them to the high expectations they have created.

      Thought I doubt Harper and Flaherty have any sense that they'll ever balance the budget – they're almost certainly focused on kicking the problem down the road and crafting a good story.

  56. Surely we can't expect those kinds of growth rates again given the current world economy. Wouldn't it be prudent to put the Gst up a point or even two? [ in combination with a brake on new spending of course] Or are you saying the cut in spending and growth[95-2000] were linked?

  57. This is a big, meaty proposal: I’ll mention one thing that occurs to me and will likely be missed by everyone else:

    You cannot put Via on a full cost-recovery mandate while simultaneously mandating what services it has to provide. Putting it on full cost-recovery means every route except Windsor-Quebec (ie, Toronto, Ottawa and Montreal) gets axed. That’s fine for me, as a damned eastern bastard, but everyone else might be less sanguine about losing competition, especially with Greyhound pulling out of Northern Ontario and Manitoba.

    • Take the public parasite away, maybe Greyhound stands a better chance being economically viable in N.Ont. and in MB…

  58. Oh, and a good question we should all ask ourselves:

    Will Canadians rather see most of these cuts (and they are going to feel like cuts), or a 2 ppt hike in the GST?

    • Don't know. But as a democrat I say: let the people decide. Put the matter before them in an election (or better yet a referendum): Cut spending, or raise taxes?

  59. Well, we've located one of the Three Stooges. I wonder where the other two are these days?

  60. I've never really grasped this concept of essential service and no right to strike…either the right to strike is a democratic right or it isn't. I get the reasoning behind it…but still the principle bothers me. That a govt can remove a democatic right at will grates on me. The again, there are rules to how essential service designation is handled…perhaps it's not as simple as i allow?

  61. I don't need to go as far as that — I'm only suggesting that the sort of vulgar Keynesianism that draws a straight-line relationship between cuts in public spending and reductions in economic growth — Chretien in '93 predicted any attempt to erase the deficit would cause "revolution" or "civil war" — was rather disproven by events.

  62. Technically the OAS is subject to a clawback, but it's still pretty generous.

    I'd also recommend looking at catch-and-release taxation programs like the Canada Child Tax Benefit. Under the old tax credit system, the government simply took less money off your paycheque based on a couple of lines on your tax return. Under the CCTB, the gov't takes your money and uses a beaurocracy created simply for this single purpose to return it to you.

  63. I can think of a more fundamental debate: Is balancing the budget the top priority?

    I believe the last time Harper spoke clearly on the subject his position was that there would be no cuts to spending programs, no new taxes and he would wait as long as necessary for the deficit to disappear. Ignatieff had stated getting rid of the deficit was the priority and that if we ended up with a structural deficit then spending cuts or tax increases would be necessary.

  64. Satire,right?

  65. Watch out for mustache shrapnel.

  66. Rather than pay to keep them in, kick Quebec out of confederation. $16.7 billion saved right there; coming up with the additional 3.3 will be easy.

  67. Brunch is a Hegellian synthesis of breakfast and lunch. As such, it is obviously a communist plot to take away democratic meal choice and must be eliminated.

  68. Why should the federal governmet build it?
    Why not get the governments of Windsor-Toronto-Montreal-Quebec and that of Calgary-Edmonton to build it?

    • Why not let a PRIVATE VENTURE that wants to make a buck build it?

      I know, I know, there's not a buck to be made, so… hey, wait a minute…

  69. During 1995-2000 we had various economic booms internationally, which increased demand for our resources. So I take it you've some miraculous plan to do that as well?

  70. The outlook for most commodity prices is still quite bright, despite the global economic downturn.

  71. Andrew Coyne for Finance Minister!

  72. Considering the guy who's in there right now? Meh.. six o' one, half dozen o' the other.

  73. Yes, as I just wrote, the fiscal update and the PBO report both already assume that stimulus spending will be phased out before 2014 which is how the PBO winds up with the $19 billion structural deficit figure. Taking that phase out into account again–by using 2008 numbers as the baseline–is, therefore, double counting.

    To be fair, this doesn't change the validity of the rest of your piece–because you still use the PBO's $19/$20 billion figure as your target for actual cuts–but the point is that the $296B/$254B projections for outlays in 2014 already include the phase out of stimulus–and that an additional $20 billion in cuts below projected expenditures would be needed to balance the budget. That's an 8% reduction below what is currently estimated will be needed to continue current programs/policies (assuming the introduction of no major new programs).

  74. Still the right place to start though. GST @ 7% — reversing the mistake made for crass political reasons. Won't happen — Can you imagine SH admitting a mistake? I don't think so!

  75. Still the right place to start though. GST @ 7% — reversing the mistake made for crass political reasons. Won't happen — Can you imagine SH admitting a mistake? I don't think so!

  76. Furthermore, even if you accept the logic of using last year's budget (2008-09) as a starting point you would have to include not just growth from 2009 to 2014 (i.e. 2009-10 to 2014-15) but for the growth from 2008-09 to 2009-10. That's an extra year.

    I'm also wondering where you got the figure 6.1% for price increases between 2009 and 2014. Page 15 of the fiscal update you cite puts price increases at ~2% for every year after 2009. Did you get this from a different source, or am I misreading this? The calendar years don't match up exactly with the fiscal years, of course, but the data from the page referenced above imply a price increase of somewhere between 11.1% and 12.7% compounded over the relevant six year period. Combined with your population growth figure that winds up being a 17.0% and a 18.7% increase in spending just to keep pace with inflation and population growth.

    (Thank you for your reply to my comment, BTW. It is always great to see Macleans writers actually participating in the comments!)

  77. Yes, but politics is not necessarily an honourable business, and election campaigns are not necessarily the appropriate venue for such debates. You yourself have pointed out the dishonourable position the Progressive Conservative opposition in Ontario has taken over the HST. And raising taxes will become a typical 'eek-a-mouse' gotcha issue for anybody who tries to raise it during a campaign.

    A better approach would be deliberative governance – have a genuine and intelligent dialog with Canadians about what they want government to spend money on and what they don't and let them decide with all the choices and information that government itself has. Otherwise, all we will get is partisan grandstanding and bad policy.

  78. Ah but Chretien had the ghost of Pet looking over his shoulder[ artisitic license...he wasn't actually dead]…i imagine it was quite a shock to realise Trudeau was wrong on that point.

  79. Did Coyne actually suggest that we follow the Canadian Taxpayers Federation's budget model?!?

  80. How about cutting 10 million in PAP funding to Rogers publications, 3 million of which goes to this rag?

  81. and what makes you think we won't again

  82. you 're concerned about adverse effects on the economy and your answer is to raise taxes?

  83. Between now and 2012? The fact that, aside from ridiculously low interest rates, we're still in a massive recession. When you hear people talking about a "jobless recovery", what you're hearing is someone pulling the wool over their own eyes.

  84. we're talking about 2014 if I'm not mistaken and the economy is already forecast to grow by nearly 3% in the next year, I think you underestimate the capacity of the economy to recover. recovery nearly always leads increased employment will it take longer? Perhaps but the timeline is not as hopeless as you suggest.

    • This is Canada. Don't underestimate the ability of the public sector to swell incredibly (hey, great, look at all these jobs…)

  85. Actually, no. Only Mr Coyne does satire

  86. But this rag is Canada's finest. Leave us at least our pretensions.

  87. I thought that the old Reform Party was all about holding referenda on such issues, what happened with that ?

    Oh, sorry, forgot, Stephen Harper arrogated all the power for himself. He decides.

  88. Yup. Raising taxes generally hinders the economy all over, I'll agree. But it does so in a way that is mild enough that the economy can recover.

    Doing major cuts or raises in a small area can basically devastate that area, and economies are not smooth gradients. There are a number of places where tipping points can be reached, such that the effort to get things back to normal can be vastly greater than if the same damage were spread out.

    Consider everybody starts paying an extra $5/yr in taxes, vs a factory being shut down.

    Which really does more damage to the economy? Would that extra $5 everybody saved create as many jobs as the factory over the course of the year? Probably not.. again, it boils down to economies of scale, where focussing money (or lackthereof) can have affects that are disproportionate to the actual amounts.

  89. Pricing increasing as supply dwindles, certainly. But the booms Coyne is ignoring are magnitudes larger than outlooks being "still quite bright"

  90. Trudeau was only following the prevailing Keynesian fiscal orthodoxy at the time. By the end of his final term of office, everybody had gone with free trade, deregulated markets and monetarism. Trudeau and Canada were no exception in this regard.

  91. I'm all for it. I'd scrap all magazine subsidies, just as I'd scrap all television and film subsidies. Magazines are not a public good*!

    *That is, in the economists' sense: a good for which it is impossible to charge directly, or to exclude non-purchasers from its benefits, thus requiring that it be financed through taxes. But the benefits of reading a magazine are quite exclusive to the reader, who is as often as not the purchaser.

    • "I'm all for it. I'd scrap all magazine subsidies, just as I'd scrap all television and film subsidies. Magazines are not a public good*!

      How "all for it" are your bosses, hack boy?

      Sure you can say it, but when push comes to shove, they'll shove you out before they'll do without the 10 million a year in free money. You really aren't that worth it.

      Don't be so disingenuous.

  92. Perhaps. We are getting into issues of belief here, but I strongly believe that this "recovery" we are seeing is really just the result of the central rate being ridiculously low and pumping money into our economy at an enormous rate — far faster than our actual productivity has any justification for. There will be a price to be paid for this, there always is when money outstrips productivity.

    To combat this, we have to pull money out of the economy. So high interest rates, or higher taxes. Cutting how much the government spends won't do this, as that money is still out there, like a time-bomb that we're continuing to shove powder into.

    • Thwim, I'm with you on that. What's going on with low rates and housing sales/prices right now is simply not sustainable over the long term. It's helped mask a lot of underlying slack in the economy, but it can't go on forever. We're way too overreliant on housing and related activity right now, and the whole sector, and a lot of people in it, have become addicted to ridiculously cheap money.

  93. I'm not double-counting anything. You're overthinking this. Yes, the $254-billion projection for 2014 includes the phase-out of one-time stimulus funding. That's my point: it still leaves us, according to the PBO, $19-bil (round to $20b) in the hole. So we need to get another $20 billion out of regular, baseline spending, over and above the stimulus phase-out. That is, we have to get spending in 2014 down to $234-bil. The only reason I invoke the fiscal 2009 numbers is to put that target in perspective: it amounts to holding spending to about inflation-plus-population from that date. It's just an illustration.

  94. Really?

    For me, considering the guy who's in there right now, I'd rally behind a cry of "slightly bruised banana for Finance Minister!".

  95. "even if you accept the logic of using last year's budget (2008-09) as a starting point you would have to include not just growth from 2009 to 2014 (i.e. 2009-10 to 2014-15) but for the growth from 2008-09 to 2009-10"
    I have. My proxy for fiscal 2009 (my start year) is calendar 2008: GDP=$1.609 tril. My proxy for fiscal 2014 (my end year) is calendar 2013: GDP=1.862 tril (from Sept. update). If I'm measuring growth in spending from fiscal 2009 to fiscal 2014, then it follows I'm measuring growth in GDP from calendar 2008 to calendar 2013.

    "I'm also wondering where you got the figure 6.1% for price increases between 2009 and 2014"
    Again, I'm using calendar years as proxies. Sept update shows growth in GDP price index for calendar years 2009 (ie measures increase in GDP price index over calendar 2008) through 2013 as follows: -2.3%, 1.8%, 2.0%, 2.3%, 2.2%. To get the cumulative price increase, multiply .977 * 1.018 * 1.02 * 1.023 * 1.022 = 1.0606, or a percentage increase of 6.06%. Rounded, that's 6.1%.

  96. Excellent, so we'll eliminate magazine subsidies! If Anon's numbers are correct, just leaves 99.95% of the problem to go!

  97. Well, sure it's Canada's finest now that there's no Beaver.

  98. You get my point, exactly.

  99. I'm with Coyne on this. I would love it if the next election were actually about something substantive AND if both major parties offered clear and contrasting choices on this question. So far, the Tories seem to offering up the "cut spending" option. The 64K question is whether the Liberals will offer up something which is a clear alternative — such as hiking the GST. If I recall correctly, there are some Liberal Party talking heads that have gone on record calling the GST cuts "irresponsible" etc. But will they have the cojones as a party to actually propose a hike?

  100. Uh. Where's Harper's party offered up the "cut spending" option?

    So far, the only option I've seen them offer up is, "Just close your eyes and trust us."

  101. I'm not defending the Tories here, believe me, and I realize that talking generally of cuts is one thing, and offering specific cuts is quite another. But mere seconds of googling offers up a host of news stories in which Flaherty has said he's going to make cuts in spending. Such as this one, in the Liberal Party house organ:

    http://www.thestar.com/news/canada/article/742220

  102. I know. But the point was better days never really came along to killof the mounting debt.

  103. Oh! He does, does he? :)

  104. The problem is the deficit is much higher than Harper/Flaherty is willing to admit. Added to this is new Senior Boomer Generation starting in less than year and their demands/votes are a concern on both sides of fence. Couple this will real unemployment number above 10% and new higher interest rates, Harper' Sales Tax and real time bust in Real East.

  105. The short-term effects of reduced government spending on unemployment can be countered by monetary policy. Fiscal contractions decrease the demand for money, raising interest rates and giving the bank of Canada some room to expand the money supply.

  106. Ahhh . . . monetism. Essentially, lay someone off, and they suddenly become a free resource and the economy expands somewhere else to hire them, providing the government knows the exact adjustments to the money supply.

    As I understand the actual research on this, yes, more or less, in the long term, with the following caveats: approx 7% of laid-off employees don't find new work, enlarging the welfare-receiving underclass. Laid-off employees need to be retrained, move to new positions where they aren't as productive, population centres contract, companies need to build new facilities before they can hire more employees, etc.

    Also, monetism doesn't effectively define "long-term". One year? Five years? Ten? Twenty? One-hundred? (Your argument should be long-term effects, not short-term, by the way. Monetist arguments ignore short-term effects.)

    Also, without a magic looking glass, the central bank has to guess at the appropriate money supply. Too little, it doesn't match the contraction. Too much, hyperinflation. Monetism assumes this magic looking glass is possible.

  107. Look further at all the handouts to private corporations, for heaven's sake and raise the GST immediately.

    Yes, I know that won't happen.
    I agree with some of what A. Coyne says; however, I would not that OAS is already clawed back above a certain income. Perhaps the level at which OAS begins to be clawed back should be lowered, and the GIS for low income seniors should be increased.

  108. Wow, it can be done! From a hard line fiscal point of view, nice work. Only thing is, your forgetting the social and societal implications of some of those cuts. Uh oh, I've said too much! Please no one point out my left leaning, welfare collecting ass!

    • I foresee a renewed Good-bye Charlie Brown campaign. I might be willing to start it m'self.

  109. And decades of right-wing leadership demonstrates that – if there's a single vote to be lost – the Conservatives would run Canada's finances even further aground then cut one shiny penny.

  110. Of course, all this assumes that there's some steady upward slope toward economic recovery, be it dramatically quick or frustratingly slow and malaisey. But upward, right? The worst is behind us, right?

    There's still a potential commercial real estate bubble in the US (bigger than the mortgage crisis?), there are concerns about the Chinese economy being an ungodly huge bubble, there's still potential for oil shock, credit shocks…

    I'm gonna go hang out with Jim Beam and pretend that we've already seen the bottom.

  111. I think Jolyon's right, it's mostly salaries for public employees that is the problem.

    This link is and quote for all of the US, but it's the worst in California:

    State and local government employers spent an average of $39.83 per hour worked for total employee
    compensation in September 2009, the U.S. Bureau of Labor Statistics reported today. Total employer compensation costs for private industry workers averaged $27.49 per hour worked in September 2009.

    http://www.bls.gov/news.release/pdf/ecec.pdf

  112. It depends which "right wing leadership" and which "Conservatives" you're talking about. I agree that the current bunch in Ottawa don't inspire much hope in that department, and that Flaherty left a fiscal mess behind him in Ontario. However, Ralph Klein's govt in Alberta was absolutely true to its word when it adopted a fiscal austerity program in the face of a fiscal crisis, and it cut spending significantly and eliminated Alberta's then deficit. Brian Mulroney's govt made a number of significant cuts to spending, but history has showed that they simply weren't deep enough, and that was partly due to (i) lack of spine, (ii) bleating Liberal and Dipper opposition to every proposed cut and (iii) a comparatively high interest-rate environment which meant that interest on the debt alone was a huge expenditure item and was accelerating faster than it could be contained.

    • I don't have time to research this, bu t I can't help but wonder the effect of oil revenues on Klein's success.

      As for Mulroney, you're documenting his failure to cut the deficit. The opposition is supposed to oppose, don't scapegoat them (or you'll wind up sounding like Stephen Harper).

      • In any event, it looks like (quelle surprise, bring out the smelling salts) we're not going to get that principled "cuts vs. tax increases" election that Coyne (and I) would like to see. Instead, we're going to get the Tories saying they'll cut spending and not raise taxes, and the Liberals saying that they won't cut spending (and in fact may increase it) and they'll do something (as yet undefined) about the deficit later:

        http://www.theglobeandmail.com/news/politics/pror

        Basically, we have the choice between two brands of BS. Choose your poison.

  113. Just to bring Coyne's response to my last comment to greater prominence:

    "I'm all for it. I'd scrap all magazine subsidies, just as I'd scrap all television and film subsidies. Magazines are not a public good*!"

    The only reason hack-boy here is saying this and getting away with it is that no one's seriously talking about cutting Rogers publications 10 million a year government subsidy. If he championed it vocally, Rogers would surely conclude that he's not worth 10 million a year in free money.

  114. With the exception of constraining transfers to provinces (shifting the jurisdiction of debt doesn't help much), I'm in complete agreement.

  115. Fine as far as it goes. But ALIGNING the jurisdiction of taxation and spending authority does a lot to sharpen the focus. Spending other people's money is a fine way to spend too much money…

    • yep raise the GST 2 % or even 3% to solve the problem. Then lower it again when the books are in shape.

      • Or keep 'er at 7% and lower other more economically-damaging taxes instead. Maybe lower income tax rates while doing away with silly nickel-and-dime credits.

  116. You make some very exciting and controversial points. One, that Rogers is opposed to the idea of ending subsidies to Rogers. Two, that I am not personally worth $10 million annually to Rogers. Take that, conventional wisdom!
    But it's the connection between the two that's truly groundbreaking. If I understand you rightly, at some point Rogers would have to … choose: me or the subsidy. That is, Rogers would have to fire me if they wanted to keep that $10 million in government cash rolling in every year. And why would they have to fire me? Because I was too dangerous, that's why! Because I had the power to kill the subsidy cash cow, just by writing about it. I had become a threat to them! I had to be silenced!
    I don't think I've ever had such a lovely compliment. But what is this? Are these … tears?

    • but does Anon not then face a conundrum of grand proportions?

      If an individual indeed had that much power, any individual not Coyne here, would he not be worth at least $10 million annually to Rogers. I mean, imagine the potential of that power!

  117. I'd like to help all the "Non Governmental Organizations" all those do-gooder NGO's actually become non-governmental and cut off their lip-lock on the public teat.

    They are useless anyway, so why should we pay for them.

    And about the CBC . . add that they CBC has to be moved to the optional cable channels so we actually have a choice about having to pay for All Socialist Mumbo-Jumbo on TV or not.

  118. Good article Andrew. Im not sure how cutting the rise in the transfers to provinces is not just passing the buck. I see that as leaving the provinces to account for their budget shortfall while still providing essentially the same services. I suppose you are then expecting provinces to go through a similar overhaul? Im not sure what the forecasted expenditures are in all the provinces but I expect they will be rising. I think you are on the right track but I see the provinces getting shortchanged and facing dramatic budget shortfalls at the expense of a federal balancing. I like the thoughts, however, this issue caught my eye.

    And leave the CBC alone. I know you enjoy your time with Peter.

  119. Good article Andrew. Im not sure how cutting the rise in the transfers to provinces is not just passing the buck. I see that as leaving the provinces to account for their budget shortfall while still providing essentially the same services. I suppose you are then expecting provinces to go through a similar overhaul? Im not sure what the forecasted expenditures are in all the provinces but I expect they will be rising. I think you are on the right track but I see the provinces getting shortchanged and facing dramatic budget shortfalls at the expense of a federal balancing. I like the thoughts

  120. PM Harper likes to strike fear in to voters – warning against the tax and spend policies of the left – Seems Harpers tax cut and spend policies are not working either. Bush liked those too!

    With the average government wage at a 17.3% premium to the private sector according to the CFIB I think some work towards narrowing that gap is in order. Maybe cut out a few billion dollars of consultant work and get these highly paid administrators to do some investigating on their own using their knowledge and skills that they are paid for can help. This is a phenomenom in all 3 layers of government. I am not talking about doing a Mike Harris style slash and burn and dump on the lower tier what's left action but rather a concerted realization by all levels of government that there is only one pocket to pick and we taxpayers like to pay our way but not one penny more than is necessary!

  121. Agree with everything EXCEPT your point on CMHC. It should be sold. There is no reason to have government owned insurance providers. There are private sector competitors in mortgage insurance (Genworth, formerly AIG now owned by OTPP) but the government effectively acts as a monopoly controlling about 70% of the market.

    The existing regulatory framework covers the mortgage insurance providers and there is likely a positive economic benefit to the Canadian taxpayer from spinning this business off.

  122. Since most provinces vote left, then we know they overspend. Yes we can cut transfers.

  123. Uh, the CTF real fiscal conservatives? The CTF that never met a farm subsidy they didn't like? That CTF? Please.

  124. Obviously, they can cut extavagant expense accounts .
    Senators have not need for money. Besides, they get OAS and this should be cut for ALL seniors who are well enough off that they donot need this extra payment.
    So many of us live on about $1200 a month or less.
    Yet we survive.
    Increase the taxes for people making over $85,000 a year.
    People ho drive should be paying more for this activity since they cost us so much in in expenses for police,hospitals,emergency crews,courts, coroners,street cleaning,noise and pollution.The average driver spends over $8750 just on maintenance on one car for one year yet they whine about the cost of food and ofcourse taxes.
    Every MP and government department should have a fine toothed comb taken to expenditures,just as we lower income people do.

  125. Andrew , good writer but leave the elderly alone and avoid syllogisms.
    Arthur

  126. No subsidy to the CBC? Hmm, do magazines get subsidized postal delivery service?

    Recover 100% of Via Rail costs? Hmm, does the free highway system recover 100% of its costs from drivers and transports? Toll roads could make a big dent in the deficit. All major highways in China are toll roads. And they are building 400-km rail lines. We could learn something from China, eh?

  127. No subsidy to the CBC? Hmm, do magazines get subsidized postal delivery service?

    Recover 100% of Via Rail costs? Hmm, does the free highway system recover 100% of its costs from drivers and transports? Toll roads could make a big dent in the deficit. All major highways in China are toll roads. And they are building 400 km/h rail lines. We could learn something from China, eh?

  128. We need someone to write a comprehensive article investigating what our Senate does, what it costs Canadian taxpayers to maintain from year to year, and then explain how we can get rid of this institution quickly and with the least amount of cost to the taxpayer. If the government is looking for ways to balance the budget, this is a big one. Just because the Senate may be a part of our historical, national fabric doesn't necessarily mean it is still a good fit.

  129. Just a few words…sacred cow national defence

    • A $21 billion sacred cow- and we still do not have Arctic Icebreakers or Navy Frigates

  130. It is simple to cut $40-$50B ….get rid of the Unions in Government and level the benefits and pensions of the public sector to that of the private sector. Pension would be years of service plus age must be 85 to start a full pension (this included MPs & MPPs), Unions add to the cost of every project and purchase made by Govt. Govt is inefficient and extremely costly.

  131. The Government is reducing spending already,The Canada Pension cost of living increase for 2010. is 0.5% $4.50 per month.
    I must be living on another Planet,In Ontario my Local taxes ,gasoline ,Hydro Water & Food have increased
    approx 6 to9%, thank heavens for the HST in July

    • Well atleast we have strong banks that pushed their subprime mortgages back to the government
      Oh – And they got a stern letter from Mr Flaherty that we must have 30 days notice before they jack up our fees – That's nice

  132. This was received in my inbox 1/29/2010 7:50AM . The blogs are shown 4 days ago-is it because i reside in the west that i don't receive them at the same time as others?

  133. So go ahead and gut the things that matter in this country. Conservatives don't listen to CBC, it is too elite for them. You seem to have no idea of what holds this country together. Cuts like you propose would reduce the Conservative seats to maybe three (a la Kim Campbell), and rightly so. What about increasing the GST? What about the military – surely we can save on the $22 billion we have spent in Afghanistan? What is the government going to do about health care which has been neglected for 4 years? They are unprepared for any surprises as it is. Lets just let the little Native kids and their mothers rot on reservations while Harper pursues his program for the health of mothers and children in Africa? Why not make Canada Post be financed by those who use it? Just shows what happens when you give a copy of the estimates to a Conservative journalist. Harper should ask Paul Martin what to do and he would be fuine.

    • Is fuine a new liberal word ? How can we save on the $22 billion that we have ALREADY spent in Afghanistan ? Huston we have a problem but what do you expect from a left winger !

  134. wont work mulrooney , harris devine deifinbaker cambell clark all left a hell of a right wing mess now harpers doing the same and coyne wouldnt be any better, the right cant govern never could never will all they care about is helping the wealthy get wealthier.. and some have the gull too even do work for the cbc a crown corp hmm, i thought the right wanted too sell cbc ?

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