By John Geddes - Monday, March 25, 2013 - 0 Comments
Perhaps the biggest unanswered question about the budget Finance Minister Jim Flaherty tabled last week was how he planned to cut a whopping $4 billion out of the government’s operating expenses in the coming year. As it turns out, though, that might just be the easiest part of Flaherty’s budget-balancing task ahead.
The planned cut in question falls under the heading “direct program expenses,” which means it’s a saving that must be found in what Ottawa spends directly, not what it transfers to people and provinces. After posting $80.5 billion in operating expenses in 2012-13, Flaherty’s new budget allows for just $76.5 billion in 2013-14. And “Economic Action Plan 2013,” as he likes to call the budget, offers scant detail on what is to be slashed to achieve this $4-billion reduction, which led one columnist to say the budget plan shows operating costs “magically dropping” and another reporter to call the cut “something of a mystery.”
By Aaron Wherry - Thursday, March 21, 2013 at 6:59 PM - 0 Comments
Stopping by the House of Commons on his way to China, Jim Flaherty received the customary ovation afforded a finance minister upon him arriving to deliver the budget. He received another standing ovation when he stood to table the four books that apparently comprised this year’s Action! Plan!
The Conservatives did not stand to applaud again for another 400 words. Until precisely this.
“Much of what I announce today is aimed at making this country an even better place to raise a family, to work and to establish a business. But, before I proceed, I need to make one thing very clear,” Mr. Flaherty explained. “And it is simply this: Our government is committed to balancing the budget in 2015.”
The Conservatives cheered. And a couple dozen of them stood again a few moments later when he restated it.
“We will not back away from our steadfast commitment to fiscal responsibility,” Mr. Flaherty vowed. “We will not balance the budget on the backs of hard-working Canadian families or those in need. But we will balance the budget. And we will do it in 2015.”
As Scott Clark and Peter DeVries have noted, this promise has the odd quirk of being unverifiable until after the next election. The Harper government can say now that it will balance the budget by 2015 and it might even present a budget in 2015 that demonstrates as much, but not until 2016 will anyone be able to say for sure whether the federal budget has actually returned to black. Continue…
By Erica Alini - Friday, January 25, 2013 at 3:59 PM - 0 Comments
As of November 2012, almost three-quarters of the way into fiscal 2013 (April 1, 2012 to March 31, 2013), the federal deficit stands at $12.4 billion, Finance Department said today. That’s quite a bit below the $15.5 billion shortfall recorded over the same period last year.
Given these year-to-date figures, it’s reasonable to expect that federal deficit for the year as a whole will come in under the $26 billion the Harper government predicted back in its November fiscal update. Sonya Gulati, at TD Economics, for one, expects a $22 billion deficit. In a note to clients this morning she even predicted that “the government’s 2016-2017 deficit reduction timetable could be reasonably be brought forward by one year.”
That’s still not enough to balance the budget by the next election, which will probably happen in late 2015, as the prime minister would like, but it’s far better than what most provincial premiers can say.
It certainly stands in stark contrast with Alison Redford’s “bitumen bubble” speech yesterday.
Lower than expected prices for Alberta’s oil are leaving it with not enough cash and too much of the icky black stuff.
“This bitumen bubble,” she told Albertans in a taped video clip last night, “means the Alberta government will collect about $6 billion less in revenue this year alone.” That’s how much the province spends on education every year, she added.
That will likely be the $3 billion deficit Redford already expects for fiscal 2013, a shortfall that was originally estimated at only $800 million.
The trouble, as you probably know (if you don’t read more here), is that without a convenient and fast way to deliver Alberta’s oil to where it’s needed, the price of Canadian heavy crude is dropping and the spread between it and world prices widening to record levels. As the Bank of Canada noted this week, lower resource royalties will leave provincial governments cash-strapped—and not just in Alberta.
But energy market woes are only part of the problem when it comes to Canada’s provincial coffers: it is Ontario’s credit rating, after all, that’s on the line, not Alberta’s (at least for now). But the more serious, long-term problem for resource-rish and resource-poor provinces alike comes from swelling ranks of seniors and low replacement rates.
Just a few days ago Kevin Page, Canada’s top budget watchdog, reiterated that Ottawa had better start producing periodic analyses of long-term deficit and debts of all layers of government, something the auditor general also recommended.
That seems like a mighty good idea.
By Erica Alini - Tuesday, January 22, 2013 at 12:51 PM - 0 Comments
What just happened
Predictably, America seems set to avoid yet another manufactured fiscal crisis.
House Republicans introduced legislation (read the full text here) on Monday that would suspend the debt ceiling until May 19.
The bill is somewhat unusual in that, unlike similar legislation in the past, it does not raise the borrowing limit but waives the cap entirely until the set date in May. As Politico explains, this was fine political maneuvering on the part of Republican lawmakers, who thus avoided agreeing to a “specific dollar amount that could be used against them in campaign ads.”
The draft legislation also contains a provision that would withhold pay for members of Congress unless they pass a budget by April 15 (it is a feat that has eluded the U.S. Senate in the past). The GOP is branding this as a “no budget, no pay” measure, although, in fact, it simply delays paying members of Congress until the end of 2014 at the latest.
The prospect of a likely deal on the borrowing cap spurred a series of bullish bets in financial markets, and U.S. observers around the world are drawing a big sigh of relief.
Rewind: a bit of background on the debt ceiling
What the House Republicans’ bill will likely avoid isn’t so much a full-blown default but a technical default. As Keith Hennessey, who was White House National Economic Council Director under former President George W. Bush, argued last week, a scenario in which the U.S. government would fail to pay bond-holders on time (which would without question trigger a credit rating downgrade and increase America’s borrowing costs, not to mention cause utter panic in financial markets) was never really in the cards.
By Aaron Wherry - Wednesday, November 28, 2012 at 5:52 PM - 0 Comments
The Scene. The Finance Minister should at least feel chuffed that the Leader of the Opposition feels it important to pay very close attention to what he has to say.
“Mr. Speaker, yesterday the Finance Minister said that Canada is ‘not in need of a contingency plan’ to deal with the threats facing our economy,” Thomas Mulcair recounted this afternoon. “That was quite a surprise because just two weeks ago the same finance minister said, ‘we have contingency plans not only with respect to the fiscal cliff, but with respect to the European situation.’ Which is it? Facing the real threat of another recession, do the Conservatives have a contingency plan or not? Canadians deserve a straight answer.”
Perhaps Jim Flaherty was merely a bit too cute with his response yesterday. But he surely couldn’t say so now. And anyway, he was elsewhere, so here came Jason Kenney to offer the government side’s official explanation.
“Mr. Speaker, of course, this government is and will continue to be prudent in our fiscal and economic planning,” Mr. Kenney explained. “That is why we have the best fiscal position in the G7. It is why we have the best job creation record among the major developed economies. It is why the OECD says we will have the best economic growth for many years to come.”
With that much sort of clarified, Mr. Kenney moved to segue. Continue…
By Aaron Wherry - Monday, November 19, 2012 at 5:36 PM - 0 Comments
The Scene. With the benefit of a few days hindsight, Thomas Mulcair stood to review the week just passed.
One day last week, the NDP leader recalled, the Finance Minister had said a balanced budget would be delayed. But a few days later, Mr. Mulcair noted, the Prime Minister had said the budget would be balanced by 2015.
“So who is right?” he begged, holding out his hands and turning his palms upward.
This business of projecting the government’s future budgetary balance became officially silly somewhere between October 14, 2008 and October 17, 2008. And in that regard, Mr. Mulcair’s question is moot. Who is right? Conceivably, eventually, the Conservatives will be. It simply stands to reason that if you keep making predictions, you will eventually get at least one of them right.
Alas, promising that “the budget will be balanced at some point probably” does not project the sort of certainty we demand in our political leaders. And so here stood Tony Clement to convey the latest version of the official reassurances. Continue…
By Aaron Wherry - Friday, November 16, 2012 at 2:36 PM - 0 Comments
“It remains the government’s plan, intention, to balance the budget prior to the next federal election,” he said at a press conference in Quebec City.
Scott Clark and Peter DeVries say the economic update was “lacking in transparency, accountability, and a realistic assessment of economic and fiscal prospects and risks.”
By Aaron Wherry - Wednesday, November 14, 2012 at 1:09 PM - 0 Comments
Stephen Gordon reviews yesterday’s economic update.
The structural deficit introduced by the GST cut had to be addressed at some point. The 2011 budget would have been too early: the recovery was still fragile. In February, I was of the opinion that a small amount of fiscal contraction was appropriate for the 2012 budget: private-sector employment had recovered its pre-recession peak, and it was time to get federal government’s house in order in time for the next recession. And that’s what we got, although in the form of modest spending cuts (the 2012 budget had nothing on Paul Martin’s 1995 austerity program) and not a reversal of the GST reduction.
The main effect of slower-than-previously-expected growth is less income and expenditure, which means lower tax revenue. This would be bad news if Canada’s deficit and debt were at the levels they were 20 years ago, but—thanks to Paul Martin and Jean Chrétien—Jim Flaherty has a much thicker cushion to work with. Bond markets will not be upset by a slight delay in the path to a balanced budget, so there isn’t any pressing need for further fiscal tightening.
By Aaron Wherry - Tuesday, November 13, 2012 at 3:38 PM - 0 Comments
The New Democrats and Liberals are unimpressed with the Finance Minister’s economic update. And Jim Flaherty faces the possibility that the federal budget won’t be returned to balance when the Conservative seek re-election in 2015.
Mr. Flaherty was asked at the luncheon about not being able to balance the budget during the Harper mandate, before an election scheduled for 2015. “I’ll be frank with you. I don’t play with numbers, the numbers are the numbers,” the minister bristled. He said it was not a “significant” amount.
He noted that $1.8-billion is “a little more than half a percent of the federal budget,” which is about $275-billion. “We are talking about relatively small amounts of money in the big picture,” he said. “The good news is we are on track.”
The government recently conceded that the deficit was structural.
Here is a chart from the CBC that details federal surpluses and deficits between 1963 and 2011. If you assume that today’s updated projections will hold true, the Conservatives will have run surpluses (non-adjusted) of $13.8 and $9.6 billion, followed by deficits of $5.8, $55.6, $33.4, $26.2, $26.0, $16.5 and $8.6 billion between 2006 and 2015.
As was noted around the bureau this afternoon, several of the Conservative party’s 2011 campaign promises were linked to a return to balance. Income sharing for couples with children under the age of 18, the children’s fitness tax credit, the adult fitness tax credit and doubling the tax-free savings account limit were all to be “implemented when the federal budget is balanced within our next full term of office.”
By Aaron Wherry - Tuesday, November 13, 2012 at 12:24 PM - 0 Comments
With the latest “adjustment for risk,” the Harper government projects a small deficit in 2015-2016 and a return to surplus in 2016-2017.
The return-to-surplus has been something of a moving target over the years. In March 2011, the Harper government announced that it would return the federal books to balance in the 2015-2016 fiscal year. Seventeen days later, by then in an election campaign, the Conservatives promised to return to balance in 2014-2015. Seven months to the day after that, the Harper government decided it couldn’t fulfill April’s promise and went back to March’s projection.
The Globe notes that this year’s deficit is now projected to be $7 billion larger than expected.
By Aaron Wherry - Wednesday, November 7, 2012 at 12:18 PM - 0 Comments
The Parliamentary Budget Officer hasn’t received enough information to do a full analysis, but he says it seems like government services are being cut to eliminate the deficit.
The report is based on a fraction of the information Page sought from about 80 departments, but the projected savings they provided paints a very different picture of the nature of the cuts from what many expected when the budget was unveiled in March. “There are significant reductions that could have potential service level impacts,” said Page. “Minister Flaherty indicated when the budget was tabled that the majority of reductions relate to back office operations in government (and) they don’t relate to service delivery… The information provided by departments indicate only a small proportion of restraint relates to internal service reductions… to the extent there was a surprise, that was it.”
About 85 per cent of the savings appear to come from programs for Canadians and the cost of operating them, which places the reductions closer to the front-line than the government originally suggested. The big cuts are in programs in the areas of international, immigration and defence at $1.7 billion; social programs at $784 million, general government services at $716 million, and security and public safety at $688 million.
The PBO’s full report is here.
By Aaron Wherry - Wednesday, October 10, 2012 at 9:45 AM - 0 Comments
Stephen Gordon notes that the finance department considers the federal deficit to be structural.
Notwithstanding the Conservatives’ repeated rejections of the PBO claim, last year’s budget was an implicit admission that a significant portion of the federal government’s deficit was structural. If the Conservatives really believed that the deficit was purely cyclical, there would have been no need to adopt austerity measures in order to bring the budget back into balance.
The estimates released last Friday are a final confirmation of the problem.
This Sunday marks the fourth anniversary of Stephen Harper’s election promise that a Conservative government would “never go back into deficit.” The projected return to surplus has bounced around a bit since then. In April, Scott Clark and Peter DeVries doubted whether the latest target was achievable.
By Aaron Wherry - Tuesday, September 18, 2012 at 5:33 PM - 0 Comments
The Scene. Conservative MP Robert Goguen, the duly elected member for Moncton-Riverview-Dieppe, stood just before Question Period and neatly enunciated the absurdity.
“Over government campaigned against the NDP plan for a carbon tax in 2011,” he declared, “and we campaigned against the carbon tax from the Liberals in 2008.”
Precisely. In 2008, the Conservatives proudly condemned a carbon tax while proposing cap-and-trade. In 2011, the Conservatives proudly condemned cap-and-trade as the equivalent of a carbon tax. (And even so, now, in 2012, the Conservatives can’t promise they won’t pursue cap-and-trade if the United States decides to do so.)
It is an elaborate joke. And the Conservatives are very committed to the bit (and unabashedly so). And so Thomas Mulcair is now stuck between laughing at, admonishing and ignoring the gag.
By Aaron Wherry - Friday, September 14, 2012 at 8:00 AM - 0 Comments
The Prime Minister talks to a certain news channel.
By Aaron Wherry - Wednesday, April 11, 2012 at 12:32 PM - 0 Comments
Scott Clark and Peter DeVries pan the budget.
Budget 2012 reflects how this government has operated for the past five years. It is a budget that reflects the government’s lack of confidence in itself. It is a budget that demonstrates the government’s inability, or unwillingness, to engage in public discussion and debate over ideas and policy. It is a budget that sets out to attack groups that the government believes will stand in its way. It is a budget that is divisive among Canadians, and not inclusive of Canadians. This budget is remarkable for its lack of vision and boldness. There is no narrative that sets out the longer-run economic and social challenges; there is no discussion of how these challenges are interrelated; and, there is no commitment to put aside ideologies and consider what is best for the country…
The 2012 Budget is disappointing not just for its failure to propose a credible agenda for strengthening long-run economic prospects, but also for what it says about how this government will continue to manage economic policy in future budgets. Budget 2012 will be remembered for its lack of vision; its lack of transparency; its lack of accountability; and its lack of sound economic policy. Future budgets are likely to provide more of the same.
They also don’t think the Harper government will meet its latest projections for a balanced budget.
By John Geddes - Thursday, March 29, 2012 at 4:20 PM - 0 Comments
Back in 2006, Finance Minister Jim Flaherty began his first budget speech by reflecting on how “budgets say something about your motivations and your goals.” Having spoken that truism, Flaherty launched straight into announcing “tax relief people can see,” meaning mainly, of course, the first of the Tories’ two one-point cuts to the GST. Motivation and goal: lay the populist groundwork for turning Stephen Harper’s minority into a majority.
Three years later, Flaherty tabled his 2009 budget during the global recession brought on by the previous fall’s financial markets meltdown. “We must do what it takes,” he said, “to keep our economy moving and to protect Canadians in this extraordinary time.” He meant a deficit-fueled stimulus-spending spree. Motivation and goal: ease the pain of a downturn so punishing that it might, come the next election, land the Conservatives back in opposition.
The budget Flaherty unveiled today is neither the hopeful blueprint of a freshly minted government nor the defensive playbook of one facing a crisis. Given the Conservatives’ experience in power, and the lack of immediate threats facing them, a calmer, bolder plan might have been expected. Yet Budget 2012 is curiously tentative. Where potentially big measures are sketched—on funding cutting-edge companies, reforming immigration, or streamlining resource-project reviews—details remain frustratingly fuzzy.
Flaherty’s most telling line today was not about what he plans to do, but what he doesn’t have to. “We have no need,” he said, “to undertake the radical austerity measures imposed by the federal government in the 1990s.”
That tone of palpable relief runs through the budget. The much-discussed review of program spending, for instance, found just $5 billion in annual spending to cut from 26 departments and agencies. Flaherty is right—that’s hardly “radical austerity,” considering Ottawa’s total program expenses 2012-13 will be $245.3 billion.
Modest as it is, though, the restraint underscores a bedrock Conservative preference. As a share of gross domestic product, direct federal spending is projected to slide from 6.5 per cent in 2012-13 to 5.5 per cent in 2016-17. Note that during the same stretch Ottawa’s transfers to individuals and the provinces are slated to hold steady.
So the budget plots a course for a federal government whose own programs shrink a bit, while it keeps contributing about the same amount, as a share of the economy, for things like health care and seniors’ pensions.
Had you heard otherwise? In fact, Flaherty’s policy on curbing the growth in health transfers is calibrated to allow those payments to keep pace with economic growth. As for pensions, he has put off any pain for many years, announcing that the age of eligibility for Old Age Security and Guaranteed Income Supplement benefits will rise from 65 to 67 only gradually and not until 2023 to 2029.
With the Conservatives moving gingerly to limit Ottawa’s direct spending, while aiming to hold steady on transfers, anyone searching for signs of a more sharply defined small-c conservative bent might look to policies affecting business.
And the budget does include a much-anticipated general promise to speed up approval for oil, mining and forest-industry projects. It’s contingent, however, on the government negotiating with the provinces to introduce a “one-project, one-review” system. Details pending.
There’s also a pledge to put $400 million into venture capital for innovative firms that show promise as future “global leaders.” But exactly how Ottawa will pick those winners is put off with a promise that “in the coming months, the government will consider how to structure its support in order to incent private-sector investments.”
A pro-business immigration reform was also expected, but, yet again, the budget is vague, saying only that “in the future” the government will work with companies and the provinces to attract “a pool of skilled workers who are ready to begin employment in Canada.”
Any of these measures might turn out to be landmarks. Based on the budget itself, however, we just can’t be sure. Against the backdrop of smallish spending cuts, a holding-pattern policy on transfer payments, and no significant tax changes, the stay-tuned-for-details feel of the economic competitiveness package adds to the overall impression that the real news isn’t quite here yet.
Meanwhile, the once-daunting challenge of balancing the books again after the post-2009 deficits has been drained of drama. The federal fiscal situation has improved nicely in recent months, as the economic recovery continues, leaving Flaherty in a position to project, with room to spare, a slim deficit of $1.3 billion by 2014-15, and a surplus the following year. Some private forecasters now expect an end to federal red ink a year or two earlier.
The pressure, in other words, is off. Thinking back to Flaherty’s 2006 budget preamble, what motivations and goals shaped this one? A prime political motivation is surely to avoid risky controversy. An overarching policy goal to is keep the federal government about as big as it is now, while taking cautious steps toward bolstering the private-sector economic competitiveness.
After the populist feel of 2006, and the crisis-control urgency of 2009, the 2012 budget feels staid. Those who feared the Conservatives might adjust to their majority by imposing politically fearless measures early on will be breathing easier. Those who hoped to see that same fearlessness, though, will have to look ahead to all those next-steps, and to next year’s budget.
By Aaron Wherry - Thursday, March 29, 2012 at 1:41 PM - 0 Comments
Mike McNair, a former advisor to Stephane Dion and Michael Ignatieff, blames Conservative tax policy for the current deficit.
The federal deficit, this year estimated at $26 billion, would already have been wiped out had the Harper Conservatives not taken more than $30 billion per year out of the federal tax base.
The Conservatives used budgets and fiscal updates from 2006-2008 to introduce sweeping personal and corporate tax changes. Federal revenue in 2014-15, the last full year of the Conservative mandate, is estimated to be $285 billion, which means that Conservative actions have reduced the tax base by over 10 per cent since they took office. While many of these tax reductions were small, targeted tax credits (such as the fitness and public-transit tax credits), significant revenue was lost through a handful of much more consequential measures.
By Aaron Wherry - Thursday, March 29, 2012 at 12:18 PM - 0 Comments
The Macleans.ca team has put together a special budget page with interactive charts on government revenues and expenditures, deficits, surpluses and public debt.
Paul Wells, John Geddes and Tamsin McMahon are currently sequestered with the federal budget and will emerge at 4pm EST with thorough coverage. I’ll be taking in the scene on Parliament Hill and keep an eye on Erica Alini’s Econowatch for news and notes throughout the day.
By Aaron Wherry - Thursday, March 29, 2012 at 8:30 AM - 0 Comments
Yesterday, the Canadian Press pegged the cuts at $7 billion. Last night, the CBC reported the total will be closer to $4 billion. The Post says it’ll be around $5 billion, with the elimination of approximately 25,000 public service jobs. MP and public servant pensions will be changed. The House of Commons will trim its budget by 6.9%. And the hiring tax credit for small businesses will be extended for another year.
Bu the Senate is already in open revolt over the closing of a cafeteria in the Victoria Building.
So, members of the Red Chamber will have to take a slight detour, without having to put on their coats or boots, to get to the cafeteria. Moments later came this reply from Senator Don Plett, the Manitoban and former Conservative Party president appointed to the senate by Prime Minister Stephen Harper: “What a bad, bad idea. The Victoria cafeteria was for the Senators and staff.”
By Aaron Wherry - Wednesday, March 28, 2012 at 10:49 AM - 0 Comments
The Canadian Press says the Harper government will cut $7 billion from discretionary spending. But the Conservatives won’t be saying how. At least not yet.
Flaherty will not detail how the cuts will be implemented in the budget, but the sources say most of the reductions will be front-loaded to realize the biggest savings.
Indeed, the Star says silence is the order of the next few days.
Some government departments have been told to throw a 48-hour cone of silence over the impact on federal jobs and programs from spending reductions announced Thursday, officials say.
The budget will apparently promise to overhaul environmental regulations. Those changes won’t be detailed until later, but the legislative amendments will be rolled into the budget bill.
The package will include legislative amendments that are expected to be part of the government’s overall budget implementation act – a prospect that is raising concerns among opposition MPs and environmentalists that the Conservatives intend to ram through the changes with little debate.
The one thing we can know for sure: Jim Flaherty is getting new shoes.
By Aaron Wherry - Monday, March 26, 2012 at 12:58 PM - 0 Comments
The Harper government would prefer you not think of Thursday’s budget in terms of what will be cut.
The government wants Canadians to see the budget as a growth plan, and not simply a slashing exercise aimed at eliminating the deficit. “If you concentrate on savings, you are going to miss out on what this budget is all about; it’s about long-term sustainability for jobs, growth and prosperity,” a senior government official said Sunday.
See previously: The austerity that dare not speak its name
By Aaron Wherry - Monday, January 30, 2012 at 11:43 AM - 0 Comments
Stephen Gordon projects the sort of job cuts the public service might be facing.
Federal program spending accounted for 7.4 per cent of GDP in the fiscal year that preceded the spring 1995 austerity budget, and this share fell by 1.3 percentage points over the next two years. In 2011-12, federal program spending was projected to be 7.0 per cent of GDP, and was to fall by 0.8 percentage points by 2013-14. In other words, the cuts in program spending announced in last year’s budget were roughly 60 per cent as large as what we saw in the mid-1990s.
Federal public service employment fell by 29,000 in 1996, and by an additional 26,000 in the following three years. If the effects of the planned cuts are proportional to what was experienced in the 1990s, then the number of job lost would be on the order of 30,000.
See also: Looking the wrong way
By Aaron Wherry - Tuesday, January 17, 2012 at 11:48 AM - 0 Comments
Alex Himelfarb attempts to put austerity in perspective.
Today’s austerity, however, is not primarily about fiscal prudence. If it were it wouldn’t be proceeding in tandem with large, unaffordable and unnecessary tax cuts for the most affluent among us. These tax cuts make deeper program cuts inevitable. The persistent emphasis on low taxes and cuts to services and public goods looks more like ideology masquerading as fiscal common sense. In this light, austerity seems rather to be about cutting back the state and rolling out the free market agenda. Less public, more private; less collective, more individual. It is, in other words, the fulfillment of the neoliberal counter-revolution rather than an economic plan for the future…
We need to have the debate – and the starting point cannot be some assumption about the inevitability of austerity. In fact, it ought not to be about big government versus small government. It ought to be focused on what will work to enhance the quality of life for most Canadians and what will make Canada more resilient for future generations. It ought to be a debate about what challenges, what problems, most urgently cry out for our collective attention and action. The preoccupation with austerity should not blind us to what really matters for our collective well-being.
By Aaron Wherry - Tuesday, January 10, 2012 at 5:30 PM - 0 Comments
The CBC reports the government will cut deeper into departmental budgets than previously planned. The Finance Minister raises the possibility that some departments may have to cut more than 10% from their budgets.
The Post reports that the Conservatives may try to adjust MP pensions, but the Finance Minister seems to defer.
On the issue of whether changes are afoot for the pension plans of members of Parliament, Mr. Flaherty said that is a decision for the House of Commons Board of Internal Economy, not the government.
By Aaron Wherry - Tuesday, January 10, 2012 at 2:34 PM - 0 Comments
Scott Clark and Peter DeVries consider the Harper government’s health funding proposal.
The decision to tie the growth in the CHT to the growth in nominal GDP – a rate of growth that will be less than the current 6 per cent per year – clearly indicates that the federal government recognizes that it is facing a “structural deficit” that needs to be confronted now. The Parliamentary Budget Office (PBO), international organizations and we have argued that the federal government is facing a small structural deficit now but that it will increase rapidly after 2015 due to demographic pressures on potential economic growth and health related spending. To date, the Minister of Finance has denied the existence of a structural deficit and has publicly ignored any discussion of the demographic pressures. This is the first indication that he has seen the numbers and is worried, although it is doubtful he will admit this in public and/or release any internal research done on this subject.