By Aaron Wherry - Tuesday, May 14, 2013 - 0 Comments
John Ivison says Tony Clement was shocked to learn that the $3.1 billion in anti-terrorism funding couldn’t be tracked and Ivison suggests part of the solution is reforming the estimates process. The Hill Times considers the same possibility.
The thought that estimates reform might be linked to the missing $3.1 billion occurred to me when the Auditor General released his report, so I asked Scott Clark and Peter DeVries if there was such a link to be made. In response, they suggested there was not.
The information on what happened to the $3.1 billion will not be resolved by any of the proposed changes to the Estimates process. Since all monies must be approved by Treasury Board and then Parliament, the records are there as to what happened to the $3.1 billion. However, to find out would be very time consuming given the number of years under review. If it lapsed, the info should be there. If it was reprofiled, TB would have to approve it. If it was reallocated to other programs, TB would have to approve it.
After John’s column yesterday, I double-checked with Scott and Peter. Was moving to a program-based estimates system a solution to problems such as $3.1 billion?
Not necessarily. TBS and departments would still need to keep track of all of the transactions as to whether they lapsed, were reprofied or directed to another vote or program. Details on programs would require more info. There is no reason why the $3.1 b can’t be accounted for except for slopply paper work. The same could happen under a program system.
Whatever the applicability of estimates reform to the question of the $3.1 billion, the estimates process needs to be reform. And $70 million seems a relatively small price to pay to ensue Parliament can better scrutinize government spending. As no less than the Finance Minister was recently moved to declare, “Canadians are entitled to know what their government is up to.” And $70 million is considerably less than the Harper government has already spent on “economic action plan” ads.
By Aaron Wherry - Monday, May 13, 2013 at 9:29 AM - 0 Comments
Is that Finance Minister Jim Flaherty arguing that Parliament needs a fully independent and better-funded parliamentary budget officer?
Is that Finance Minister Jim Flaherty saying that the government will spend the necessary funds to implement full estimates reform?
Is that Finance Minister Jim Flaherty expressing regret for the lack of disclosure that resulted in the government being found in contempt of Parliament two years ago?
Is that Finance Minister Jim Flaherty agreeing that government backbenchers need to be more independent so that they can properly hold the government to account?
Is that Finance Minister Jim Flaherty pledging that comprehensive access to information reform will be a priority over the next two years?
Is that Finance Minister Jim Flaherty explaining that the government will comply with the interim parliamentary budget officer’s request?
Nope. That’s Finance Minister Jim Flaherty explaining why the Harper government spends money on ads like this.
By Tamsin McMahon - Thursday, May 2, 2013 at 7:08 PM - 0 Comments
Finance Minister Jim Flaherty has named Stephen Poloz the next governor of the Bank of Canada. The announcement shocked analysts who had thought that long-serving senior deputy governor Tiff Macklem was a front-runner. Poloz, head of the federal trade agency Export Development Canada, has a low profile in financial circles.
Here’s a primer on who he is and what he might bring to the job:
1. He is 57 and married to Valerie Poloz. The couple has two children.
2. He spent 14 years at the Bank of Canada, rising to chief researcher, before being appointed chief economist at Export Development Canada in 1999. He is currently the agency’s CEO.
3. During the 1990s, he was managing editor of the Montreal-based International Bank Credit Analyst, an influential financial publication that long warned against jumping into frothy, dot-com fuelled stock-market bubble before it burst.
4. He has also been a visiting scholar at the International Monetary Fund and the Economic Planning Agency in Tokyo.
5. He was previously rumoured to be on the short-list of candidates to replace David Dodge as Bank of Canada governor in 2008.
6. He warned early on of a potential for a major financial crash:
In 1998, after Long-Term Capital Management went bust, requiring a $3.6-billion U.S. government bailout, some analysts shrugged off the episode as the workings of a rogue hedge fund. Poloz was among those who predicted the fund’s failure was more likely a sign of a financial system that was working itself into a bubble built on complex and opaque derivatives, which would eventually require more bailouts. “I think there will be lots more” fund failures, he predicted in 1998.
7. … and then got it wrong after it happened.
In 2007, Poloz predicted the financial crisis would be short-lived. “A key source of comfort during the financial turmoil of recent weeks has been the consensus that the world economy remains strong,” he wrote in an analysis. “This is important, for it means that even if the financial contagion continues to spread, the world economy will prove resilient to the shock.”
8. He helped set the framework for Bank of Canada policies largely seen as successful in helping Canada stave off the worst of the global recession.
In 1994, while still at the Bank of Canada he co-authored a paper describing in detail the central bank’s approach to its medium-term forecasting. It may sound dull, but the paper was a critical step in the bank’s sweeping shift away from clandestine operations and toward more transparency in how it sets monetary policy.
It’s an approach strongly supported by outgoing governor Mark Carney and one that he has signaled he’s bringing to the Bank of England. Carney is a vocal a proponent of more communication and forward guidance from central bankers — signaling to investors where interest rates will likely be headed in the future —arguing that it can be calming on the markets and perhaps induce consumers to adjust their spending.
9. He disagrees with Carney on a few key issues.
Unlike Carney, who has criticized Canadian corporations for sitting on “dead money” instead of investing, Poloz warned in a 2011 speech that the stockpiles of cash were a “necessary insurance against the next black swan” in an era of deep uncertainty about the future of both the Canadians and the global economy.
Carney has also openly dismissed the “Dutch Disease” argument that Canada’s high “petrodollar” is harming the manufacturing economy. Poloz, on the other hand, has publicly warned that the rising Canadian dollar was harming the economy, mainly because it exacerbated the widening gulf between Eastern manufacturing-based economies and Western commodity-based ones.
He has cautioned that such economic divergence would become a long-standing problem in Canada and that similar conditions in the 1970s had led to “stagflation” when inflation rises rapidly but economic growth stalls.
“This two-speed economy thing is enormous,” he told a 2008 conference on how energy industry affects the economy, arguing that the Bank of Canada should pay more attention to the dollar’s exchange rate when setting interest rates.
10. Perhaps he’s so vocal because he initially got it so wrong when it came to the dollar:
In spring 2007, Poloz proclaimed that the Canadian dollar, then sitting at 94 cents, would fall to 84 cents U.S. by the end of the year because the weak U.S. and global economy would hurt demand for Canadian exports. “There is a global slowdown that is grinding through the system, and oil prices are probably going to drift lower rather than higher, and in that context you get the Canadian dollar going down not up.”
Instead, the dollar hit a high of $1.08 in November. It took roughly two years for his prediction to come true — the dollar dropped in 2009 — though the loonie has been stubbornly sitting around par since 2010, thanks largely to strong oil prices.
Some analysts rushed to describe Poloz as an “outsider” whose appointment signals a morale crisis at the Bank of Canada and a push by the Harper Conservatives for more control over monetary policy. Indeed, the Canadian dollar fell on news of his appointment. But Poloz could also be viewed as one of Harvard Business School professor Joseph L. Bower’s “inside outsiders” — the kind of leader who has both deep institutional experience and knowledge, but not so much that he’s become part of the establishment.
A good example of such a leader, according to the Harvard Business Review? Mark Carney.
By Aaron Wherry - Monday, April 29, 2013 at 3:30 PM - 0 Comments
Here is Bill C-60, the first budget implementation act of the year.
At 125 pages—according to the page count on Adobe—it is the shortest budget bill tabled by the Conservatives since 2009, when that year’s second budget bill was 60 pages (the first budget bill tabled that year was 551 pages). It is still larger than all but three budget bills tabled between 1994 and 2005. See this short history of budget implementation acts for previous page totals.
After tabling the bill in the House, Jim Flaherty told reporters that the government will ask the finance committee to send certain parts of the bill to different committees for study.
The bill amends the Excise Tax Act, the Excise Act, 2001, the Customs Tariff, the Trust and Loan Companies Act, the Bank Act, the Insurance Companies Act, the Cooperative Credit Associations Act, the Federal-Provincial Fiscal Arrangements Act, the Canadian Securities Regulation Regime Transition Office Act, the Investment Canada Act, the Canada Pension Plan, the Pension Act, the War Veterans Allowance Act, the Immigration and Refugee Protection Act, the Citizenship Act, the Nuclear Safety and Control Act, the National Capital Act, the Department of Canadian Heritage Act, the National Holocaust Monument Act, the Salaries Act, the Parliament of Canada Act, the Department of Public Works and Government Services Act, the Financial Administration Act and the Keeping Canada’s Economy and Jobs Growing Act.
It also enacts the Department of Foreign Affairs, Trade and Development Act, which allows for the amalgamation of Foreign Affairs, International Trade and CIDA.
By Aaron Wherry - Friday, April 19, 2013 at 11:00 AM - 0 Comments
In an op-ed for the Globe, Finance Minister Jim Flaherty suggests the tariff increases are part of pursuing new trade agreements.
The recent changes will provide an important incentive for many countries to open their markets to Canada through reciprocal trade agreements that will allow for more export opportunities – meaning better jobs for Canadians – and further tariff reductions for Canadian consumers.
Mr. Flaherty also offers an assurance about imported iPods.
Finally, due to recent confusion, I want to be clear that the changes had no effect on iPods and other music devices and their special and long-standing tariff-free exemption.
Mike Moffatt responds to that much with a question.
My question to the Minister (or to the CBSA or whoever would like to answer):How can retailers receive this exemption? What steps do they need to take to qualify?
I detail the current CBSA enforcement of the 9948 exemption in my tariff FAQ. I am having trouble reconciling the Minister’s statements with the fact that Sony has already paid an iPod tax.
It’s been a week since I asked the government to explain the exemption—specifically: Is it true that sellers of iPods and MP3 players are required to collect “end use certificates” from the final consumer to meet the requirements of 9948? I’ve renewed my request just now.
See previously: A tax on imported blankets, The Commons: Ted Menzies challenges everyone to find a tax increase in the budget, A tax on bicycles, baby carriages and iPods, The Great iPod Tax Crisis of 2013, The iPod tax: The finance department responds and Will the Conservatives repeal the iPod tax?
By Aaron Wherry - Tuesday, April 16, 2013 at 4:45 PM - 0 Comments
NDP MP Glenn Thibeault has written to the chair of the standing committee on industry, science and technology to request a “study into the increased taxation of iPods and other goods.” (The full letter is here.) And, tomorrow morning, NDP national revenue critic Murray Rankin will visit Joe Momma, a bike store in Ottawa, to discuss the Harper government’s “bicycle tax.” Joe Momma was the backdrop for Finance Minister Jim Flaherty’s announcement of C-45, last year’s second budget implementation bill.
The NDP has made up all this fearmongering dialogue about tax increases in budget 2013. There are no tax increases in budget 2013.
Somewhat similarly, Heritage Minister James Moore, responding to a question on this from Justin Trudeau this afternoon, ventured that “if we were raising the taxes the Liberals would be all for it.” Otherwise the government’s defence seems to be three-fold: assert that theirs is a “low tax plan,” claim a desire on the part of the opposition to raise taxes and allege that to not raise tariffs would be to give special treatment to China.
By Aaron Wherry - Wednesday, April 10, 2013 at 12:52 PM - 0 Comments
Three weeks after asking Manulife to raise its mortgage rate, Jim Flaherty frets—in a statement released by the Conservative party—that the New Democrats do not respect the free market.
“It has recently come to my attention that the NDP will be voting on policy resolutions at their national policy convention this coming weekend.
Normally, I would not comment on such matters. But given the NDP’s position as the Official Opposition and the far-reaching nature of many of the proposals being considered, I am compelled to register my concerns publicly. Many of these NDP proposals would have a negative impact on the economy, stifling job creation and creating hardships for individuals, families, seniors and workers. While we have long come to expect the NDP to advocate for tax increases (which they do repeatedly through their policy resolutions – from a new tax on everyday financial transactions, eliminating popular tax credits for families, imposing higher personal income and business taxes, and much more – Resolutions 1-12-13, 1-29-13, 1-77-13, 1-54-13, 1-77-13, 1-81-13, 1-82-13, 1-84-13, 1-93-13, 5-57-13; Policy Book pages 4 and 8), it is other more jarring aspects of their economic policy resolutions that should give Canadians reason for significant concern.
For example, the NDP will consider proposals to radically change the mandate of the long independent Bank of Canada, effectively making it a political arm of the Government. As recent history has demonstrated, such action leads to serious and devastating impacts on an economy. (Resolutions 1-16-13, 1-30-13, 1-85-13, 1-86-13, 1-89-13; Policy Book page 3).
The NDP policy resolutions would rip up every single trade agreement that Canada has entered into, negatively impacting Canadian exporters. Essentially, the NDP would erect an isolationist wall around Canada, retreating from being a member of the global economy. This would harm Canada’s economy and literally millions of jobs. (Resolutions 4-24-13, 5-58-13; Policy Book page 8).
The NDP policy resolutions would, much like what occurred in many socialist states last century, use the government to forcefully take over almost every major industry in Canada through nationalization. That means the NDP would confiscate and take over companies involved in the oil & gas sector, manufacturing, communications (like radio and TV stations), the mining sector, the financial services sector, the insurance sector, the steel industry, the automotive sector, and more. An economy completely controlled and run for the political benefit of the government, as history has shown, would destroy Canada’s economy and kill literally millions of jobs. (Resolutions 1-91-13,1-95-13, 1-96-13, 1-97-13, 1-98-13).
For those few remaining small businesses the NDP does not propose to outright nationalize, the NDP policy resolutions would reduce them to wards of the state with stifling government control and bureaucratic red tape. This includes proposals that would limit when they could open and would have the government dictate key business decisions. The incentives that help fuel free enterprise, the lifeblood of a market-based democracy would be dead – replaced by control by bloated government. (Resolutions 1-94-13, 1-99-13).
Considered in their totality, the NDP proposals would fundamentally change Canada from a market-based democracy to one resembling a command-economy socialist state – like those that so spectacularly failed in the last century. The fact that the NDP is actively promoting this utterly discredited economic model at their national convention raises serious concerns about their support for Canada’s proud and long traditional of being a market-based democracy centered on free enterprise.”
Here again are the resolutions that will be debated this weekend. The Conservatives have a policy convention this summer. The resolutions submitted for their 2011 convention are here. The resolutions submitted for their 2008 convention are here.
Policy conventions are, of course, tricky matters to navigate for political leaders, presenting, as they do, opportunity for expressions of thought that might not correspond with the leader’s preferred message. Just ask the Conservatives.
By Paul Wells - Thursday, March 28, 2013 at 12:00 PM - 0 Comments
Paul Wells on what the latest Economic Action Plan fails to say
One of the little joys of the Harper government’s Economic Action Plan 2013 is a chart on page 298 listing “savings measures since Budget 2010.” There are a few lines listing the total value of all spending cuts from Budget 2010, a few for Budget 2011, a few for Economic Action Plan 2012 and some more for Economic Action Plan 2013. There is much to consider in the chart, but perhaps the most interesting is the news that the government of Canada no longer publishes an annual budget. In fact, it seems to have stopped two years ago.
I work in Ottawa and I try to stay on top of things, but this was news to me. In fact, I didn’t even notice it until four days after Finance Minister Jim Flaherty released his—er—plan on March 21. Of course, there was much chortling in the press gallery at the government’s insistence on calling its annual account of revenues and expenses something besides a budget. But the significance of the thing took a while to sink in. Flaherty and his boss, Stephen Harper, do not call their big annual document a “budget” anymore because it is no longer a budget.
A budget, as anyone who has tried to run a household knows, is the moment when you stop telling yourself soothing tales and inject a note of reality into your life. On page 64 of the 1997 budget, for instance, the government of the day gave us an “outlook for program spending” with multi-year projections for spending levels in defence, Aboriginal programs, “business subsidies” and so on. It was that straightforward.
By Aaron Wherry - Monday, March 25, 2013 at 9:05 AM - 0 Comments
The impact on Canadians will likely be higher prices on a wide range of goods, including imported food. Some examples include an increase on the tariff on bicycles to 13 per cent from 8.5 per cent; venetian blinds to 7 per cent from 3 per cent; table fans to 8 per cent from 2.5 per cent; tableware to 6.5 per cent from 3 per cent; umbrellas to 7 per cent from 5 per cent, and potato starch to 10.5 per cent from 5 per cent.
According to the government’s own calculations, the elimination of duties on sports and baby clothes will cost $76 million a year, but it will gain $333 million annually by its other measure. ”They are basically giving us a dollar and taking back five. It’s a bit of a shell-game,” Moffatt said.
The Harper government expects to take in $1 billion more in revenue as a result.
If the New Democrats were proposing this, the Conservatives would almost certainly—using the same logic they’ve employed to deem the NDP’s cap-and-trade proposal a “$21-billion tax”—describe this as a $1-billion tax.
Mr. Flaherty promised in his budget speech that the Harper government would not raise taxes.
By Aaron Wherry - Friday, March 22, 2013 at 10:58 AM - 0 Comments
Steve Chase notes the hikes in tariffs.
The federal government is hiking tariffs on 72 countries in order to help retire the deficit faster – a measure that will cost Canadian consumers $330-million more per year in higher prices.
The measure, contained in the 2013 budget, will mean higher prices for a variety of goods. It will take effect in 2015.
Paul McLeod notes how little has been explained about cuts to Defence, Fisheries and the Canada Revenue Agency. Scott Gilmore considers the merging of CIDA with Foreign Affairs. Stephen Gordon questions the Canada Job Grant. Colin Horgan looks at funding for aerospace. Scott Clark and Peter DeVries consider Jim Flaherty’s chances of balancing the budget by 2015.
Ultimately, much depends on what comes next.
Flaherty’s office won’t say yet whether the budget proposals will be stuffed into another omnibus bill, an unpopular tactic with opposition parties and Canadians who want MPs to spend more time reviewing key measures separately. Highly controversial changes to how bodies of water are regulated, for example, did not come to light until the actual budget bill was tabled last year.
“I’m getting used to the modus operandi of Stephen Harper and it makes me feel that nothing can be said about this budget until we see this implementing legislation,” said Green party Leader Elizabeth May. ”Until we see if we’re facing another omnibus bill, one that we fear will take an axe to the Species at Risk Act, we have to wait and see.”
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 John Geddes - Thursday, March 21, 2013 at 6:54 PM - 0 Comments
NDP Leader Tom Mulcair apparently couldn’t think of a verb for the sort of tight-spending policy he perceived in the 2013 federal budget, so he redeployed an adjective, saying, “You cannot austere your way out of a crisis.”
Beyond that novel phrasing, Mulcair’s reaction to Finance Minister Jim Flaherty’s latest fiscal plan combined criticism of the Tories for being unreliable economic forecasters and some pointed objections to particular budget moves.
On Flaherty’s pledge to balance the books by 2015, the NDP leader noted that the budget assumes 2.5 per cent growth in gross domestic product next year, up from just 1.6 per cent this year, which is, in turn, well below the 2.4 per cent GDP growth projected in last year’s budget.
“His predictions are constantly wrong,” Mulcair said, adding, “”They are making a very high prediction for [GDP growth] next year to come up with their under $20 billion deficit. That will, of course, also be proven to be wrong.”
By Scott Feschuk - Thursday, March 21, 2013 at 10:30 AM - 0 Comments
Because of all the complex terminology, reading about this week’s federal budget sure can be taxing. (Ladies and gentlemen: wordplay!) Lucky for you, I’ve spent the past several years compiling and refining a helpful guide that translates all that wonky budget lingo.
Austerity During tough economic times, the federal government reduces the amount it spends, except in areas that reflect vital public trusts like health care and snowmobiles.
Balance of Payments The formal term for rushing out to buy a new pair of shoes after discovering your husband dropped $700 on a flat-screen TV.
Benchmark Bond The little-known brother of the famous spy, he was killed in a tragic securitization mishap.
By Aaron Wherry - Thursday, March 21, 2013 at 10:15 AM - 0 Comments
The Star attaches some numbers to the budget’s big promises and the Globe previews the Finance Minister’s signature commitment to cheaper hockey gear. Earlier this week, Scott Clark and Peter DeVries advised caution and scrutiny.
The Government is conditioning everyone to expect very little in the budget. Our experience is that when a government does this, you should start to be concerned with the fine print in the budget. Look what happened with the 2012 budget. The actual budget was vague, obtuse, and lacked substance. Then came the budget Omnibus Bill. A two part Omnibus Bill with over 1000 pages, which included legislative changes, only remotely referred to in the budget or not at all. Hopefully, this will not happen again, but the reality now is that the budget runs from the day of delivery (March 21st this year) to the tabling and passing of the budget bills by June 30. Minister Flaherty may deliver his budget March 21st but we may not know what is actually in it until he tables the budget omnibus bill(s). The media should be reading budget documents a lot more carefully than in the past. They should take advantage of Finance and Treasury Board officials and other government officials in the budget lock-up to explain “vague” drafting in the budget.
As I wrote for our preview, the budget has become an annual test of parliamentary democracy.
By Stephen Gordon - Wednesday, March 20, 2013 at 3:00 PM - 0 Comments
Finance Minister Jim Flaherty has dropped hints to the effect that the March 21 budget will include efforts to revisit the system of tax expenditures: the deductions, exemptions and credits for various activities, firms and people. Eliminating tax loopholes always sounds like a good idea, but it’s not always obvious what the distinction is between a loophole and an integral part of a well-designed tax system.
The largest single item in the 2012 edition of the Department of Finance’s report on tax expenditures is the basic personal amount deduction: more than $30 billion in foregone tax revenues. There is no way the government will remove this tax deduction, nor should it: public finance theory recommends a deduction covering the minimal income required to sustain a basic existence. Other big-ticket items include the system of RRSPs ($15 billion) and exemption of groceries from the GST ($3.9 billion). You can see why the business of eliminating loopholes is not simply a matter of wiping the slate clean. There are a lot of babies in that bathwater. Continue…
By Aaron Wherry - Wednesday, March 20, 2013 at 1:02 PM - 0 Comments
In having his office intervene yesterday with Manulife’s mortgage rate, the Finance Minister managed the neat trick of earning the disagreement of all of Thomas Mulcair (“It’s Banana Republic behaviour”), Bob Rae (“That’s ridiculous”) and, now, Maxime Bernier.
“Me, personally, I would not dictate to businesses what prices to decide,” he says. “It’s the market. It’s supply and demand that decides the prices. It is the case for interest rates, it is the case for other products too.”
In Toronto to pick up some new shoes, the Finance Minister explains himself.
“Our concern, my concern, for a number of years with very low interest rates is to ensure that people can afford their mortgages when interest rates go up,” said Mr. Flaherty Wednesday in Toronto, where he toured a Roots factory and tried on a new pair of shoes as part of a long-standing pre-budget tradition.
“That’s the concern. It’s a concern for the Canadian people that they’re careful and that they don’t assume that very low interest rates like we have now will continue indefinitely, because they won’t. Inevitably, interest rates will go up, so that’s the concern,” he said.
It is probably good that this happened after the Manning conference.
By Aaron Wherry - Wednesday, March 20, 2013 at 12:40 PM - 0 Comments
Ahead of budget day, what do we know, or think we know, about what the Finance Minister will present at 4pm tomorrow?
There’ll be something for the manufacturing sector. And a new focus on skills training. And money for infrastructure. And some tax loopholes will be closed. And changes to public sector sick leave and disability insurance. And more spending cuts, including cuts to the Defence Department. And nuclear liabilities will add $2.4 to the deficit.
What’s left to announce? If we’re placing bets, I’ll take a flyer on a royal commission on taxation.
By Paul Wells - Wednesday, March 20, 2013 at 8:18 AM - 0 Comments
A sluggish economy means deep cuts are coming, but Canadians might not notice. At least not right away.
One thing Stephen Harper learned soon after he became Prime Minister was that Canadians have little intuitive grasp of decimal places. A government does not get 1,000 times more credit for spending $1 billion on something than it does for spending $1 million. In fact, it does not get twice as much credit. As long as the government notices a problem and nods at it, it wins approval from voters who care about that problem. So not long after his man Jim Flaherty started delivering budgets, a Harper era of small and essentially symbolic investment began.
Similarly, the ability to tell the difference between a little belt-tightening and a wholesale cut to a government service or department is not a widespread skill. So as long as the government offers only the vaguest information about its spending cuts, few Canadians will go searching for details.
This general numerical dyslexia will come in handy this year more than most, as Jim Flaherty tries to meet a zero-deficit target that is suddenly rather close—2015, give or take—while dealing with a lousy economy. Continue…
By Aaron Wherry - Thursday, March 14, 2013 at 12:25 PM - 0 Comments
Jim Flaherty has announced that the federal budget—or “Economic Action Plan 2013“—will be tabled on March 21.
Stephen Gordon offers his wish list here and Erica Alini looks at the wider economic trends here. Stephen previously considered how the latest GDP numbers should impact the budget here. And John Geddes looks at defence spending here.
By Aaron Wherry - Tuesday, March 5, 2013 at 6:20 PM - 0 Comments
With his second question, Thomas Mulcair rounded on the Finance Minister.
“Mr. Speaker, the Finance Minister announces changes to mortgage rules and then reverses them. The Finance Minister announces changes to skilled training programs and then reverses them, all without warning, all without consultation, all at great cost,” Mr. Mulcair declared. “It is no wonder that senior public servants from the Finance Minister’s own office are now calling his actions ‘a disgrace and an insult to Parliament.’ ”
The NDP leader had slipped two ways here. First, the two senior public servants in this case—Scott Clark and Peter DeVries—are formerly of the finance department and neither ever worked under the authority of Jim Flaherty. Second, the specific “disgrace” and “insult” to Parliament referred to was the practice of omnibus legislation.
The Prime Minister might remember feeling somewhat likewise about omnibus bills, but he stood here to resolutely defend his Finance Minister. “Canada is very lucky to have the most successful finance minister in the world,” Mr. Harper proclaimed. “That has been recognized by experts in this field around the world and is backed by the performance of the Canadian economy. In spite of the tremendous difficulties that continue to exist, the global uncertainty, the Canadian economy has managed to created 900,000 net new jobs since the end of the recession and that is due, in no small measure, to the good efforts of the Minister of Finance.”
Mr. Mulcair persisted, returning to the matter of Mr. Flaherty’s letter to the CRTC. Mr. Harper persisted in defending his minister. Somehow or another this culminated in John Duncan, the former aboriginal affairs minister who was recently dispatched after an errant letter to the tax court, receiving a standing ovation from the Conservatives.
When Bob Rae stood to ask his first question, he returned the House to this matter of the former public servants and their quibbles with the government’s general approach to budgetary matters. Continue…
By Stephen Gordon - Monday, March 4, 2013 at 12:43 PM - 0 Comments
The short answer is: apart from forcing government forecasters to update their near-term projections, it shouldn’t.
One longer answer starts with the national accounts identity:
GDP = Consumption + Investment + Government + Net exports
Changes in GDP can be attributed to changes in these expenditure categories. The charts below break down the contributions to the GDP growth during the past few business cycles. Both charts show the per cent contributions to the total increase or decrease in GDP. Here’s what happened during recessionary periods:
By Aaron Wherry - Tuesday, February 26, 2013 at 5:43 PM - 0 Comments
Conservative MP Robert Goguen had apparently been up late last night, carefully reviewing the main estimates and he was keen this afternoon to rise shortly before Question Period and report back to the House with what he’d found. “Yesterday, in main estimates, there were significant reductions in the cost of prisons due to the influx of new prisoners not materializing,” the government backbencher celebrated, dismissing opposition concerns about prison spending in the process.
Mr. Goguen was being modest. At last report there were actually more individuals in prison than ever before. Which would seem to render those “significant reductions” all the more impressive. (Although the increasing violence in prisons might make it more difficult to feel good about frugality.)
This good news might’ve ruled the day were it not for those on the opposition side who’d also taken some time to review the estimates themselves. They were decidedly less enthused than Mr. Goguen.
“Mr. Speaker, at the same time that we continue to read in the estimates with respect to the cuts that are being made in front line programs, in foreign aid programs, in foreign affairs budgets, we now see that the CIC is increasing its advertising budget by $4 million, the Department of Finance is increasing its advertising budget by nearly $7 million, and the Department of Natural Resources is increasing its advertising budget by $4.5 million compared to the main estimates of last year,” interim Liberal leader Bob Rae reported, reading from a white piece of paper.
Now Mr. Rae wagged his finger in the Prime Minister’s general direction. “I would like to ask the Prime Minister how he can justify again this double standard where front line services are being cut but propaganda is being increased?”
Oddly, Mr. Harper begged to differ almost entirely. “Mr. Speaker,” the Prime Minister corrected, “those front line services are not being cut.”
By Aaron Wherry - Friday, February 15, 2013 at 11:36 PM - 0 Comments
A statement from NDP Aboriginal Affairs critic Jean Crowder.
“After the last two weeks of witnessing the Prime Minister defend the entitlements of his Senators and his ministers’ conflicts of interest, it’s good to finally see one Conservative, Mr. Duncan, actually take responsibility for his actions.
“Conservatives have clearly been unable to get the job done on aboriginal issues. At this crucial time in First Nation, Métis and Inuit relations, the Prime minister must move quickly to replace Mr. Duncan with a full-time Minister – not someone who’s time is split between three ministries – who can help the Conservative government change direction and start building a more respectful nation-to-nation relationship with First Nations, Métis and Inuit.”
The official story seems to be that ministers were ordered to review their files after Jim Flaherty’s letter to the CRTC got the Finance Minister in trouble and that Mr. Duncan’s letter turned up as a result of that review. John Geddes explains why writing to the tax court was such a clear infraction.
By Stephen Gordon - Thursday, February 7, 2013 at 1:28 PM - 0 Comments
Finance Minister Jim Flaherty told us yesterday not to expect much in the way of important changes in the direction of fiscal policy, and I think we can take him at his word. In budget after budget, the government has been very clear about where it wants to go.
Firstly, they will want to limit growth in transfer payments to persons — things like elderly benefits, Employment Insurance and child benefits — to the rate of growth of GDP. The last three budgets projected that these transfers would converge to around 4 per cent of GDP and then stay there:
By Aaron Wherry - Tuesday, February 5, 2013 at 8:00 AM - 0 Comments
Conservative MP Brent Rathgeber offers his thoughts on the future of the Parliamentary Budget Officer.
“The office has strayed from its intended mandate which was to provide non-partisan, independent advice. The perception, rightly or wrongly, is that the office has become part of the opposition’s research branch. I don’t think that was the intent, but it just evolved,” said Conservative MP Brent Rathgeber (Edmonton-St. Alberta, Alta.).
We need to be specific here. Mr. Rathgeber isn’t quite making the accusation that Kevin Page has conducted himself as a partisan, but he isn’t quite not making the accusation. Again, being critical of the government is not synonymous with partisanship. If the suggestion is that Kevin Page conducted himself as a partisan, the evidence to support that claim needs to amount to more than “he was really hard on the government.”
(Mr. Rathgeber alludes to “the perception, rightly or wrongly.” Perception among who? Conservative partisans? Do New Democrat and Liberal partisans differ in their opinion? Do New Democrats and Liberals think instead that Mr. Page has conducted himself in a perfectly non-partisan manner? Does this possibly demonstrate that partisans are not the best people to ask about someone else’s partisanship?)
I suspect the discomfort some have with Mr. Page’s time in office has primarily to do with his willingness to speak openly about the subjects he explored and his willingness to fight for disclosure of the information he felt he should have access to. There’s probably a good conversation to be had about how and when the officers of Parliament should be heard from and their role in a parliamentary democracy. But that discussion is a lot more nuanced than lamenting that Mr. Page wasn’t sufficiently “non-partisan.” Mr. Rathgeber seems to hint at this discussion with another comment: “This position, for whatever reason, has become very, very, public, and I think to its detriment.” I’m not sure I entirely agree, but that’s a more worthwhile discussion to have there.
Mr. Rathgeber said that the office’s high media profile, and the practice of releasing all of its reports publicly has meant that controversy-shy government MPs “almost never” ask the office for research.
“The fact that the data and the information will be released, or could be released publicly, will serve as a deterrent for government members to employ the services of the PBO,” he said…
Mr. Rathgeber said he believes that if the PBO were to release its reports directly to the Parliamentarians who request them, the move would reduce friction between the Parliamentary Budget Office and the government. He added that full officers of Parliament do not have as high a profile as Mr. Page, who serves Parliament through the Library, but that they work effectively. “There has to be some balance between the office’s ability to make reports public and its ability to still maintain non-partisanship. I realize that that’s a struggle and I don’t have a magic bullet,” he said.
If the goal—and apparently the great concern—is a non-partisan PBO, giving partisans more power to determine which of the PBO’s reports are released publicly is probably not the answer. The idea is obviously problematic—We’re going to give MPs the opportunity to withhold reports if they don’t like the findings? We’re going to waste the PBO’s presently precious time and resources on reports that won’t be made public?—but it does segue to a possible compromise.
Here is how the Congressional Budget Office answers the question, “Who can see your work?”
CBO makes its work widely available to the Congress and the public. All of CBO’s products (apart from informal cost estimates for legislation being developed privately by Members of Congress or their staffs) are available to the Congress and the public on CBO’s website. Once a legislative proposal is publicly available, any CBO analysis of that proposal is also publicly available.
The caveat there is important. A Member of Congress can consult the CBO about a legislative proposal they are considering and the CBO’s analysis of that idea will not be made public by the CBO. This would seem to satisfy Jim Flaherty’s request for a “sounding board.”
But here, meanwhile, is everything else the Congressional Budget Office (Mr. Flaherty’s preferred model) does.
CBO’s chief responsibility under the Congressional Budget Act is to help the House and Senate Budget Committees with the matters under their jurisdiction. CBO also supports other Congressional committees—particularly the Appropriations, Ways and Means, and Finance Committees—and the Congressional leadership.
CBO produces a number of reports specified in statute, of which the best known is the annual Budget and Economic Outlook. Other CBO reports that are required by law or have become regular products of the agency owing to a high, sustained level of interest by the Congress are described in our products.
In addition, CBO is required by law to produce a formal cost estimate for nearly every bill that is “reported” (approved) by a full committee of either House of Congress; the only exceptions are appropriation bills, which do not receive formal cost estimates. (CBO provides information on their budgetary impact to the appropriation committees.) CBO also produces formal cost estimates at other stages of the legislative process if requested to do so by a relevant committee or by the Congressional leadership. Moreover, the agency produces informal cost estimates for a much larger number of legislative proposals that Congressional committees consider in the process of developing legislation.
Beyond its regular reports and cost estimates, CBO prepares analytic reports at the request of the Congressional leadership or Chairmen or Ranking Minority Members of committees or subcommittees. CBO analysts work with requesters and their staffs to understand the scope and nature of the work that would be most useful to the Congress.
If we want a Parliamentary Budget Officer that provides full, public analysis of the federal budget, the government’s finances and legislation before Parliament and MPs want to be able to consult privately with the PBO, figure out what amount of staff and resources would be necessary to do so and then provide a sufficient budget. The answer ultimately is not less of a Parliamentary Budget Office, it’s more.