By Aaron Wherry - Friday, November 16, 2012 - 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 The Canadian Press - Monday, November 12, 2012 at 7:58 PM - 0 Comments
OTTAWA – Finance Minister Jim Flaherty is issuing the fall economic update on Tuesday,…
OTTAWA – Finance Minister Jim Flaherty is issuing the fall economic update on Tuesday, a mid-term report card many expect will show a modest deterioration in the government’s finances.
The report will be released at noon ET in Ottawa and in Fredericton, where Flaherty is speaking to the local chamber of commerce.
A senior government official said Canadians should not expect any big surprises in the update, such as new tax or spend measures.
Last month, Flaherty revealed government revenues had been lower than expected due to an average five per cent drop in the global price of resource commodities Canada that exports to the world.
In terms of growth, Flaherty is using a new, lower economic consensus forecast for real gross domestic product growth and also inflation-excluded nominal GDP, which bears more directly on tax revenues.
The new nominal growth estimate is for a 3.4 per cent increase this year, down from the 4.6 per cent advance forecast in the budget, and for a 4.0 per cent gain in 2013, down from the previously expected 4.4. Subsequent years were adjusted moderately upwards.
Using the new estimates, the TD Bank calculates revenues would be about $1.8 billion lower than projected this fiscal year, which ends March 31.
That may lead to a modest short-term hit on Ottawa’s bottom line.
Given what the minister has described as an uncertain and risky global outlook, Flaherty may also build in a bigger margin for risk on his deficit projections, which could delay — on paper at least — the government’s timeline for eliminating the deficit.
In the budget, Flaherty had pencilled a $21.1-billion shortfall this fiscal year, followed by deficits of $10.2 billion and $1.3 billion in the subsequent two years. The 2015-16 fiscal year would see a surplus for the first time in almost a decade.
Flaherty has said recently he still expects to meet his target for balancing the budget in the medium term, but was not specific about whether that would occur in the 2015-16 budget.
By Aaron Wherry - Monday, November 12, 2012 at 5:22 PM - 0 Comments
Jim Flaherty will apparently deliver his fall economic update to a luncheon crowd in Fredericton tomorrow. Last year, he delivered the update in Calgary. Two years ago, he presented it in Mississauga. Three years ago, he presented in it Victoria.
It will now be four years since Mr. Flaherty delivered his fall economic update to the House. You might remember that economic update as the one that nearly brought about the defeat of the Conservative government.
A year ago, Joe Comartin said that presenting the economic update outside the House “demeans the role of Parliament and parliamentarians.”
By Aaron Wherry - Thursday, November 10, 2011 at 8:30 AM - 3 Comments
Scott Clark and Peter DeVries find the Finance Minister’s budget update to be “lacking in transparency, accountability, and a realistic assessment of economic and fiscal prospects and risks.” And they suggest Mr. Flaherty start planning like Paul Martin did.
Mr. Martin’s lesson was simple. Once you have chosen the policy actions you believe are required, and given the economic assumptions, choose “risk adjustments” or “allowance for prudence” that will virtually guarantee you will not miss the target. Such a situation is “win-win” for the government. If the economy turns out better then you get credit. If the economy performs as bad as assumed you also get credit for your “prudent planning” …
Mr. Flaherty wants to now claim that he will eliminate the deficit in 2015-16. This is a mistake because the risks and evidence are stacked against this happening. It is virtually certain that he will have to revise his planning assumptions before or in the 2012 budget. It will be even more embarrassing if he has to revise it immediately after the budget.
By Aaron Wherry - Tuesday, November 8, 2011 at 4:27 PM - 47 Comments
NDP House Leader Joe Comartin argued the Conservative tactic “demeans the role of Parliament and parliamentarians.” He said it follows the government’s strategy of disrespecting democracy by bringing in time allocation and closure to shut down routine debate on legislation … “I think it obviously gives the government an advantage of being able to put out whatever their messaging is, even if there are some negative parts, without having to be concerned about an immediate response in the House from the opposition parties.”
By Aaron Wherry - Tuesday, November 8, 2011 at 3:50 PM - 5 Comments
The prepared text of the Finance Minister’s remarks is here.
Countries, just like individuals, do not stumble into prosperity. They set out a plan and stick to it, so that they are fully capable of seizing opportunity when misfortune hits, instead of merely being overwhelmed by it.
That’s not to say, of course, that our Government believes an inflexible approach for every conceivable scenario is anything to admire.
For those of you scoring at home, six references are made to flexibility against ten references to stability.
By Aaron Wherry - Tuesday, November 8, 2011 at 3:13 PM - 32 Comments
In March, the Harper government announced that it would return the federal books to balance in the 2015-2016 fiscal year. Seventeen days later, the Conservatives changed their minds and promised instead to return to balance in 2014-2015. Seven months to the day after that, the Harper government has decided it can’t fulfill April’s promise and is going back to March’s projection (at the earliest).
Depending on how you count these things, this is either the third or fifth return-to-balance projection the government has offered in the last three years (first 2013-2014, then 2014-2015, then 2015-2016, then back to 2014-2015 and now back to 2015-2016).
Including Mr. Harper’s vow in 2008 that a government led by him would “never” go into deficit, this is the second time in three years that the Conservatives have made a balanced-budget promise during an election campaign only to abandon it after being reelected.
By Aaron Wherry - Tuesday, November 8, 2011 at 8:30 AM - 16 Comments
If, as variously reported, Finance Minister Jim Flaherty delivers the fall economic and fiscal update to the Calgary Chamber of Commerce today, it will be the third-straight fall he has delivered the update to an audience other than the House of Commons. Last year it was the Mississauga Chinese Business Association who enjoyed Mr. Flaherty’s presence, two years ago it was the Victoria Chamber of Commerce.
Granted, the last time Mr. Flaherty did deliver the update in the House, what he had to say nearly brought about his government’s defeat.
By Aaron Wherry - Friday, November 4, 2011 at 10:30 AM - 3 Comments
Scott Clark and Peter DeVries lay out what the Harper government should do with its fall economic update.
The current commitment to eliminate the deficit in 2014-15 would be discarded. It is neither realistic nor necessary to eliminate the deficit in 2014-15. Eliminating the deficit two or three years later would be more realistic and acceptable in the current economic environment…
A commitment to reallocate these savings from the program expenditure reviews to new initiatives to support research, investment, innovation and infrastructure in a federal-provincial partnership … A commitment to begin the difficult but necessary process of tax simplification and reform to support efficiency, economic growth and job creation. The government would commit to use the savings (which would be substantial) to lower both personal and corporate income taxes, thereby supporting economic growth and job creation.
By Aaron Wherry - Friday, April 8, 2011 at 12:03 PM - 137 Comments
In October 2008, Stephen Harper promised his government would “never” go into deficit. In November 2008, the Harper government projected budget surpluses through 2013-2014. In January 2009, the Harper government projected deficits through 2012-2013 and a surplus in 2013-2014. In October 2010, the Harper government projected deficits through 2014-2015 and a surplus in 2015-2016.
Two weeks ago, the Harper government projected a $300-million deficit in 2014-2015 and a surplus of $4.2-billion in 2015-2016.
Today, the Harper government projects a $3.7-billion surplus in 2014-2015 and an $8.2-billion surplus in 2015-2016.
Update 2:51pm… A kind of explanation is here.
Update 4:22pm… Jim Flaherty’s previous explanation is here.
By Aaron Wherry - Monday, August 10, 2009 at 10:39 AM - 46 Comments
Jim Flaherty, November 27. We cannot ask Canadians to tighten their belts during tougher times without looking in the mirror. Canadians have a right to look to government as an example. We have a responsibility to show restraint and respect for their money. Canadians’ tax dollars are precious. They must not be spent frivolously or without regard to where they came from. Canadians pay taxes so governments can provide essential services. They trust the people they elect to serve society with that money, not serve themselves … Canadians pay their own bills and for some Canadians that is getting harder to do. Political parties should pay their own bills, too, and not with excessive tax dollars. Even during the best of economic times, parties should count primarily on the financial support of their own members and their own donors. Today our government is eliminating the $1.75 per vote taxpayer subsidy for politicians and their parties effective April 1, 2009. There will be no free ride for political parties. There never was. The freight was being paid by the taxpayers. This is the last stop on the route. There will be no free ride for anyone else in government either.
Stephen Fletcher, August 10. Mr. Fletcher also defended the Ten Percenter program, saying that people might not like the content of the flyers but they contribute to the “public discourse.”
By John Geddes - Thursday, June 11, 2009 at 3:19 PM - 60 Comments
In releasing his second quarterly update on his “economic action plan,” Prime Minister Stephen Harper today left little doubt about his government’s strategy for thriving—or at least surviving—through this recession.
It’s a three-part plan based on three questions. What’s happening now? How will things look when the economy picks up again? What will be the long-term cost of weathering this downturn?
The answers he hopes voters will come to believe: Conservatives acted fast to spend money to combat recession; Canada will come through hard times in better shape than most countries; and Canadians won’t be saddled with higher taxes and endless deficits as a result.
By Aaron Wherry - Thursday, April 16, 2009 at 3:01 PM - 2 Comments
The Real News Network—seemingly a response to the Onion News Network—has posted the first part of its three-part interview with Bob Rae. This first segment covers the rise of the coalition and the change in Liberal leadership.
By Susan Mohammad - Wednesday, December 3, 2008 at 7:00 PM - 3 Comments
It’s not pretty, but this is what she has to work with
Tomorrow, Governor-General Michaëlle Jean will likely meet privately with Stephen Harper, where it’s expected he will ask her to terminate, or prorogue, the current session of Parliament. The gambit would allow Harper to dodge a non-confidence vote scheduled for Monday, and thus avoid the humiliation of watching his seven-week-old government go down in defeat in the House of Commons.
Prorogation is Harper’s best bet for survival. However, requesting that the Governor-General suspend Parliament in order to allow the federal government to dodge a motion is unprecedented and Jean might not go for it. In fact, she’s already got another proposal on the table should she lean toward sending Harper back to the wolves: The Liberals and NDP want to take over from the Conservatives and govern with a coalition. But that’s just as unusual a solution as granting Harper’s request for a prorogation—and no less likely to silence critics of the Governor General’s role in the mess. So, what’s a Governor General to do?
Canadians, for what it’s worth, appear tempted by the thought of prolonging the misery. A national opinion poll by Angus Reid Strategies found 52 per cent of Canadians oppose proroguing Parliament; the same proportion opposes a Liberal-NDP coalition; and 68 per cent want nothing to do with another federal election campaign. So much for the wisdom of crowds.
Meanwhile, constitutional experts have been speculating all week over what Jean can (or will, or even should) do. Here’s a rundown of her options:
1) Grant Harper’s request to prorogue Parliament. This would allow the Conservatives to regroup and present a budget at the end of January, effectively a re-do for Jim Flaherty’s after his unusually combative fiscal update launched the current crisis. There are two major problems with this approach: it’s unclear whether the government would be any more stable in January than it is now; and it would leave Canada without an effective government for nearly two months while a financial crisis ravages the country’s economy.
2) Deny Harper’s request to prorogue Parliament and let his government face a non-confidence motion next Monday. This, in other words, is Jean’s “walk the plank” option. Harper’s government is facing a bulletproof non-confidence motion, scheduled for next Monday and supported by every opposition party in the House. The Conservatives are almost assured of defeat. Should the seemingly inevitable happen, Jean would still face a tough decision: Either she sends Canadians back to the polls, or she allows Stéphane Dion and Jack Layton to seize the reins of government. No one wants an election, but denying a request for prorogation and then installing a coalition seems destined to spark a messy Constitutional debate.
3) Allow a conditional prorogation. The Governor-General can make use of her reserve powers (her power to make decisions without the approval of another branch of government) to place conditions that severely restrict Harper’s authority until Parliament returns. For example, she could implement rules similar to those in place during election campaigns, during which a government can only operate on a basic level and can’t institute new policies or make appointments.
By Aaron Wherry - Sunday, November 30, 2008 at 4:43 PM - 16 Comments
During Jim Flaherty’s noon teleconference he was asked if his government had shown itself to be tone deaf to the present political situation and the profound economic turmoil would seem to supersede all else. I do not recall a subsequent admission of haplessness from the Finance Minister.
A short while later though, he was asked about opposition criticism for another part of his fiscal update: the proposed changes to the rules governing pay equity for women. Mr. Flaherty said he had not heard of such complaints, nor had he been informed by his staff of any such complaints.
That admission is altogether remarkable. Not least because the Prime Minister’s Office has just sent out a press release trumpeting its ability to eavesdrop on the telephone conversations of other parties. Continue…