A note from the Parliamentary Budget Office: So, about that fiscal update …

By kadyomalley - Tuesday, December 2, 2008 at 10:45 AM - 19 Comments

2008 Economic and Fiscal Statement: Key Issues for Parliamentarians (December 1, 2008):

“The Federal Accountability Act mandates the Parliamentary Budget Officer (PBO) to provide independent analysis to the Senate and House of Commons on the state of the nation’s finances, government estimates and trends in the national economy. In meeting the commitments of this mandate, this short note addresses some key questions regarding the Government of Canada’s 2008 Economic and Fiscal Statement:

• Do the economic assumptions presented to Parliament represent a reasonable basis for fiscal projections and are the economic risks adequately characterised?

• Do the fiscal projections provided to Parliament represent a reasonable basis for planning and are the fiscal risks adequately characterised?

In general, the economic assumptions are reasonable. However, there are some issues regarding the characterization of the impacts of previous fiscal measures and risks.

[...]

Beyond the economic risks identified in the EFS, there is additional risk associated with the Government’s ability to achieve the savings and to generate the revenues associated with the measures introduced in the EFS. Table 1 presents the Government’s budget balance prior to these actions, and separates the new measures into two categories:

1) measures incorporated in the fiscal projections that were identified; and,

2) measures for which little information has been provided.

The second category provides the highest degree of uncertainty and therefore the greater risk to the EFS fiscal projections. This category includes two items, on which the Government’s projection of balanced budgets rests:

• The recognition of $2 billion in gains from the sale of assets yet to be identified; and

• Reductions in departmental spending realized from departmental reviews.

The assessment of fiscal risk would be improved if these items were presented with supporting documentation. For the departmental spending reductions, the risk associated with obtaining the estimated $6 billion in savings incorporated over the next four years can only be assessed if a list of the proposed reductions in departmental appropriations is provided. Further, to insure informed debate, the complete list of the approximately $2.3 billion in expected reductions in appropriations in 2009-10, including the value of the planned savings in hospitality, travel, and professional services expenditures, should be explicitly included in the 2009-10 Main Estimates when they are tabled in the spring.

Parliamentarians would also benefit from further details on two additional issues: first, whether the liabilities related to the Afghanistan mission have been fully accounted for6; and second, how the $4.3 billion in revenues received from this year’s wireless spectrum auction have been incorporated into the Government’s fiscal projections.

Full document available here.

The Big Mess of '08

By selley - Monday, December 1, 2008 at 1:23 PM - 13 Comments

Must-reads: Chantal Hébert, Jeffrey Simpson and John Ivison on the insanity.

Bravo, Mr. Harper
What Canada’s politicians did this weekend instead of thinking about the financial crisis.

The Globe and Mail‘s Jeffrey Simpson believes the debacle over the government’s fiscal update finally reveals “the kind of Conservative Party that all but its core supporters suspected would eventually be outed: a group of ideologues, led by a Prime Minister who discarded his campaign sweater to reveal an economist with a tin heart and a politician who looks everywhere for political advantage.” The latter isn’t really ideological, is it? Mostly, this whole thing confirms to us that Stephen Harper sees Canadian governance primarily as a game more than it highlights any particular policy motivation. But either way, it is indeed “enormously revealing” that at a time of crisis, Harper “acted in this fashion. … And very sad.”

On the other hand, as the Toronto Star‘s Thomas Walkom notes, only one thing links cutting public funding for political parties, axing a pay equity program that doesn’t seem to be “either iniquitous or expensive” and suspending federal employees’ right to strike at a time when no strikes loom—i.e., the three most contentious measures in the fiscal update. The common factor is that the targets of the measures share a “place in the Conservative party pantheon of villains.” So perhaps it really is an ideology eruption. But whatever else it might mean, Walkom argues, it confirms that “the Conservatives are neither serious nor united about tackling the economy,” and it confirms Harper suffers from a very serious self-control deficit.

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I got your stimulus right here

By Steve Maich - Monday, December 1, 2008 at 9:55 AM - 10 Comments

In today’s Financial Post, Jackie Thorpe provides some much-needed perspective on the current debate in Ottawa over the Conservatives’ fiscal update, and specifically the need for a stimulus package to save the economy.

To anybody tempted to accuse the Tories of being do-nothing malingerers on the economic file, she presents chapter and verse on billions in planned tax cuts, a planned surge in infrastructure spending, and a $75 billion credit lifeline to ensure the banks can keep lending. The bottom line: there’s already plenty of stimulus in the pipeline. Now, everybody shut up and let it work.

JT makes a pretty persuasive case. I still maintain the CPC has been pretty awful at communicating a coherent message on the economy. I’d also argue that the move to cut off funding to the parties (though a sound idea in principle) just ended up looking incredibly petty and opportunistic. Their various climb-downs now make them look weak rather than collaborative. Nevertheless – this whole controversy is supposed to centre on the question of whether Ottawa is doing enough to support the economy. And on closer inspection it would seem that they probably are. It’s easy to run around and say “we need stimulus!” But it’s much harder to articulate exactly what we need that we haven’t already got coming.

The case for change

By selley - Sunday, November 30, 2008 at 2:23 PM - 29 Comments

Aaron Wherry proposes Rob Oliphant’s speech, in which the Liberal MP excoriated the government for misrepresenting the economy on the campaign trail, as a potential eulogy for Stephen Harper’s Tories. Said Oliphant:

I was impressed that the government seemed to indicate [in the fiscal update] that, despite all evidence to the contrary, it might actually believe that government can and should be a force for good in people’s lives, and that it is appropriate for government to intervene, act and ensure that our future, particularly our economic future, is protected.

What surprises me about this recognition is that it is simply not even close to what the honourable members on the other side of the House were telling voters during the election, week after week in the recent campaign. In fact, during the campaign, the Conservatives ran against incurring deficits and un-budgeted spending while continually denying that Canada was heading toward a recession.

The problem with that eulogy, I’d say, is that it overlooks the sheer madness of what Stephen Harper and Jim Flaherty have done to themselves. The prime minister had already abandoned the campaign “against incurring deficits and un-budgeted spending,” and he’d already admitted we might be heading towards recession. He did it loudly and proudly and—as Thomas Walkom bemusedly observed on Friday—even “eloquently.” Wrote Walkom:

In Peru last week, the Prime Minister talked of the need to take “unprecedented fiscal actions if necessary” to fight the global recession.

A day later, he eloquently and deliberately compared the current crisis to the 10-year-long Depression of the ’30s, vowing that he would not make the same mistakes that governments made then by trying to balance the books at all costs at a time “when fiscal stimulus (raising spending or cutting taxes) was absolutely essential.”

A day after that, he chided those who insist that deficits must be avoided at all costs and called for a “somewhat less simplistic view” of government finances.

And then he came home just in time to watch Simple Jim deliver the same old nostrums yesterday.

In other words, the fiscal update was in many ways a return to what the government had campaigned on a few weeks ago, not a repudiation of it.

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One emergency at a time, please

By selley - Friday, November 28, 2008 at 1:56 PM - 7 Comments

Must-reads: John Ivison, Chantal Hébert, Dan Gardner, Jeffrey Simpson and Thomas Walkom, on the fiscal update.

Bad timing, at best
If you were as smart as Stephen Harper, then you’d know what he’s up to.

“There are valid reasons for the government to keep its powder dry” on stimulating the economy, Chantal Hébert argues in the Toronto Star—namely, that “in the absence of a definitive course from the new American administration, dealing with the crisis from Ottawa is a hit-and-miss affair.” But there was no valid reason to announce in yesterday’s fiscal update that political parties would be removed from the federal dole, she insists, suggesting such a move might better follow “a debate on electoral reform.” This is nothing more complicated than the Conservatives sacrificing the “goodwill in the House of Commons … on the altar of partisan self-interest,” she insists, which threatens to turn this parliament “even more toxic than its predecessors” at precisely the time it would be most damaging.

The National Post’s John Ivison, too, believes there’s a compelling case to be made to wean parties off the public teat, and insists “the Liberals only have themselves to blame for the fact that it still costs them 50¢ to raise $1 and that their donor base is only one-quarter the size of that of the Conservative Party.” But the timing, he argues, is indefensible. The public has “a reasonable expectation that Parliament should deal with one emergency before embarking on another,” he writes, “especially one of its own making.”

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Putting the FUn back into the Fiscal Update

By kadyomalley - Thursday, November 27, 2008 at 4:20 PM - 27 Comments

2:48 p.m.

Okay, so I tore myself away from what was turning out to be a surprisingly lively Question Period – well, the questions were lively, even if the answers tended towards a more muted ‘wait and see what the Finance Minister has to say later today’ – and am now ensconced in the Railway Room in what may be teeniest, tiniest mini-budget lockup ever. Whoops, I forgot – it’s manifestly not a mini-budget according to Jim Flaherty: it’s an Economic and Fiscal Update. An EFU, if you will.
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Bring on that fiscal update!

By kadyomalley - Thursday, November 20, 2008 at 2:25 PM - 14 Comments

Flaherty to opposition parties: Next Thursday. 4pm. House of Commons. Be there.