The report found the Finance Department examined the long-term fiscal sustainability implications of major policy decision only when officials considered it relevant, an approach the auditor general said is reasonable. However, the report also concludes Finance Minister Jim Flaherty was not provided with projections about the long-term financial impact of measures announced in the March 2012 budget until August 2012. “This means that senior management and the Minister of Finance were not informed of the overall impact on the government’s long-term fiscal position until well after they had approved the budget measures,” the report says.
The federal government did not conduct long-term fiscal projections of the impacts of multibillion-dollar major policy decisions such as reducing the GST to five per cent and offering a GST/HST credit to low-income earners, since it did not expect the costs relative to GDP to grow, nor did it examine the long-term fiscal implications of pension income-splitting. Federal officials did, however, examine the long-term fiscal implications of other major measures examined by the auditor, including trimming the annual funding increases in health transfers to the provinces, and increasing the eligibility age for Old Age Security to 67 from 65.
Colin Horgan places this in the context of the Harper government’s standoff with the Parliamentary Budget Officer.