What did we give up to lower the deficit?
TheStar.com – Opinion/Editorials – Before we celebrate the lower-than-expected federal deficit, the government must answer questions about how we got there.
Oct 12 2014. Editorial
Canadian governments have long masterfully managed expectations when it comes to public money. Paul Martin, for instance, was famous for projecting big deficits or small surpluses and then overdelivering. After all, a windfall looks better than a shortfall.
But that’s not the only reason the lower-than-expected federal deficit announced last week is a gift horse we really ought to look in the mouth. The roughly $11-billion public bonus seems a lot like good news, but just how good depends entirely on answers to questions the government appears eager to avoid.
What got cut to get us here?
Of the surprise windfall, $2.8 billion came from unexpected program cuts. The Conservatives claim this is evidence of sound fiscal management, proof they should be allowed to stay at the helm beyond 2015.
But surely that depends on what got cut — information the government has become expert at hiding from Parliament and Canadians. Two successive parliamentary budget officers have been stymied in their efforts to find out how the deep cuts begun in the 2012 federal budget are being implemented. The Conservatives created the PBO to report to Parliament on precisely this sort of information, but have undermined the office at every turn.
Clearly there are programs Canadians would like to see slashed and those we would like to see preserved. It would be instructive to know in which category these unanticipated cuts fall.
Are too-high EI premiums padding the books?
That’s what the current parliamentary budget officer, Jean-Denis Fréchette, claims in a new report. The largest part of the unexpected $11 billion came from increased revenues, including higher-than-expected EI premiums. That, Fréchette argues, is because those premiums have been frozen at a rate much higher than needed, producing billions of dollars that won’t be paid out to the program’s recipients.
The government might have lowered the premiums, thereby reducing the burden on employees and giving employers more fiscal room to create jobs. Or, better yet, it could have used the money to expand EI’s increasingly dismal reach. Instead, it got the political privilege of announcing a surprisingly low deficit.
What have we sold?
The source of another large portion, $2.8 billion, of the government’s unexpected earnings was described simply as “other revenues.” These likely include asset sales, for which the government gets a one-time cash infusion, often at the cost of long-term dividends. We can’t say whether we got a good deal for these assets until we have a full accounting of what was sold.
Indeed, the sum of what we know is a misleading half-picture of our fiscal position. We understand what we’ve saved but not what we’ve given up in the process.
This is doubly troubling because the government has already promised to use the extra funds to back a series of tax cuts in the lead-up to next year’s federal election. This will eat up much of the projected surplus and leave little room to restore or expand programs. Whatever we gave up to keep our deficit so low will be hard to reclaim, so before we pop the champagne we ought to learn exactly what’s been lost.
< http://www.thestar.com/opinion/editorials/2014/10/12/what_did_we_give_up_to_lower_the_deficit_editorial.html >
Tags: budget, economy, ideology, rights, standard of living, tax
This entry was posted on Sunday, October 12th, 2014 at 11:05 am and is filed under Governance Debates. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.
Leave a Reply
Recent Comments