A note from the Parliamentary Budget Office: So, about that fiscal update …

2008 Economic and Fiscal Statement: Key Issues for Parliamentarians (December 1, 2008):

“The Federal Accountability Act mandates the Parliamentary Budget Officer (PBO) to provide independent analysis to the Senate and House of Commons on the state of the nation’s finances, government estimates and trends in the national economy. In meeting the commitments of this mandate, this short note addresses some key questions regarding the Government of Canada’s 2008 Economic and Fiscal Statement:

• Do the economic assumptions presented to Parliament represent a reasonable basis for fiscal projections and are the economic risks adequately characterised?

• Do the fiscal projections provided to Parliament represent a reasonable basis for planning and are the fiscal risks adequately characterised?

In general, the economic assumptions are reasonable. However, there are some issues regarding the characterization of the impacts of previous fiscal measures and risks.

[…]

Beyond the economic risks identified in the EFS, there is additional risk associated with the Government’s ability to achieve the savings and to generate the revenues associated with the measures introduced in the EFS. Table 1 presents the Government’s budget balance prior to these actions, and separates the new measures into two categories:

1) measures incorporated in the fiscal projections that were identified; and,

2) measures for which little information has been provided.

The second category provides the highest degree of uncertainty and therefore the greater risk to the EFS fiscal projections. This category includes two items, on which the Government’s projection of balanced budgets rests:

• The recognition of $2 billion in gains from the sale of assets yet to be identified; and

• Reductions in departmental spending realized from departmental reviews.

The assessment of fiscal risk would be improved if these items were presented with supporting documentation. For the departmental spending reductions, the risk associated with obtaining the estimated $6 billion in savings incorporated over the next four years can only be assessed if a list of the proposed reductions in departmental appropriations is provided. Further, to insure informed debate, the complete list of the approximately $2.3 billion in expected reductions in appropriations in 2009-10, including the value of the planned savings in hospitality, travel, and professional services expenditures, should be explicitly included in the 2009-10 Main Estimates when they are tabled in the spring.

Parliamentarians would also benefit from further details on two additional issues: first, whether the liabilities related to the Afghanistan mission have been fully accounted for6; and second, how the $4.3 billion in revenues received from this year’s wireless spectrum auction have been incorporated into the Government’s fiscal projections.

Full document available here.