Warding off structural deficit
TheGlobeandMail.com – Opinions/editorial – Warding off structural deficit
February 6, 2009
It is to their credit that, as part of the Federal Accountability Act passed during their first term in office, Stephen Harper’s Conservatives mandated a Parliamentary Budget Officer to provide independent analysis of Canada’s finances and economic trends, and of the government’s estimates. It would be even more to their credit if the Conservatives took heed of Kevin Page’s concerns about the Jan. 27 budget, and made a serious effort to address them.
Appearing yesterday before the House of Commons Finance Committee, Mr. Page – appointed as Budget Officer last year – cast doubt upon the government’s forecast that it would return to surplus within five years. He suggested that several assumptions that the government is relying upon, including a relatively quick rebound in tax revenues from corporations, may be unrealistic – and that the country is on the verge of a structural deficit. As a result, he warned of “significant risk that the government’s budgetary balance will not return to a surplus position by 2013-2014.”
Mr. Page is not the first person to raise questions about the government’s plan to balance the books. Indeed, the vague, four-paragraph explanation within the budget – which hinges upon optimistic growth projections and the finding of efficiencies within government – all but invites skepticism. But it is one thing for the government to brush off the concerns raised by the opposition, or even private economists; it is another when those concerns come from the watchdog it appointed to help ensure accountability in fiscal planning.
Mr. Page’s concerns are especially relevant because it appears the government may soon pile more stimulus spending on to what has already been announced. In response to the suggestion by the Budget Officer and others that stimulus spending may not reach the full amount advertised in the budget, as well as signs that the recession is worsening beyond expectations, Liberal Finance critic John McCallum said yesterday that there is “a strong possibility of the need for [extra] fiscal measures before we break for the summer.” Later in the day, Finance Minister Jim Flaherty said he is “open” to more spending, and his parliamentary secretary conveyed the same message during Question Period.
Conservative MPs seemed defensive yesterday when Mr. Page appeared before them, raising questions about his calculations. But before the government even considers putting Canada further into the red, it should heed his cautions and provide a more detailed plan for how it will move beyond the $80-billion in deficits already forecast.