The estimates don’t make sense

By Aaron Wherry - Monday, April 1, 2013 at 1:15 PM - 0 Comments

Scott Clark and Peter DeVries explain how to fix the estimates process.

Ask the President of the Treasury Board about whether spending will be going up or down in 2013-14 and he’ll tell you that it’s going down.  Ask the Minister of Finance and he’ll say it’s going up.  Who is right and why the conflicting answers?  The Minister of Finance will likely be more accurate than the President of the Treasury Board. But why the confusion and why can’t Canadians and Parliamentarians get a straight answer?

See previously: Do you know how your federal government is spending your money?, ‘The fact is no one in Parliament can tell Canadians what the government is planning to spend‘ and ‘Parliament has lost control of the estimate process’

Budget day and everything after

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.

‘Parliament has lost control of the estimate process’

By Aaron Wherry - Wednesday, March 6, 2013 at 11:56 AM - 0 Comments

Colin Horgan compares the concerns of the “non-partisan” (in the Prime Minister’s estimation) CD Howe Institute with the “partisan” (in the Prime Minister’s estimation) criticisms of Scott Clark and Peter DeVries.

Concerns about Parliament’s ability to scrutinize government spending are not quite novel, nor limited to individuals who the Prime Minister and Finance Minister might easily dismiss as Liberals. Here is Conservative MP Mike Wallace expressing concern in July 2011. And here is Conservative MP Daryl Kramp expressing concern in December 2011. (It might also be relevant to note that the G8 Legacy Fund was criticized by the auditor general, in part, for how it was not clearly identified in the estimates.)

Complaints, of course, also predate this government. Here, for instance, is what a young Reform MP in March 1995.

As British history unfolded, Parliament asserted more and more its rights, not only to give its approval and its input, but to control the entire process: to control the agenda, to select ministers, to ultimately provide responsible government and democratic control over the affairs of the crown.

The funny thing about this is that as time went on the process almost reversed itself. Gradually Parliament pushed the crown out as the governing force in British democratic countries. As soon as that happened, the government increasingly became a force very much independent of Parliament, until it is as we have it today, where estimates are presented in the hundreds of billions of dollars, approved by Parliament without serious scrutiny, almost on a ritualistic basis. We saw that here last week.

Auditors General have pointed out on many occasions, and in many different ways, that Parliament has lost control of the estimate process. The question will increasingly arise, particularly as we go through this period of governments cutting spending, cutting favours and the goodies which they give to the population, as to why people believe that this process protects their interests, protects their tax dollars and protects their financial interests.

Eleven years later, a slightly older Stephen Harper was still sufficiently concerned that he ran on a platform that included the creation of “an independent Parliamentary Budget Authority” on the grounds that “governments cannot be held to account if Parliament does not know the accurate state of public finances.”

Maybe Mr. Harper now thinks that his government has completely rectified the situation and that the concerns of Mr. Clark and Mr. DeVries are thus baseless. But then, even the irreproachable CD Howe Institute seems to quibble.

And now a word from Scott Clark and Peter DeVries

By Aaron Wherry - Wednesday, March 6, 2013 at 9:20 AM - 0 Comments

I asked the two former finance officials if they had any response to the comments made in reference to them yesterday in the House. They’ve now sent along the following response.

We have never been members of any political party. We have both served under Conservative and Liberal governments and were never accused by them of being partisan. We provide independent advice to anyone or any organization/party who seeks it.

To date, there are over 100 articles on our blog. The article for Inside Policy brings together observation made in previous blogs – none of which received any reaction from the Government.

The Commons: Stephen Harper sees partisan people

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…

‘The fact is no one in Parliament can tell Canadians what the government is planning to spend’

By Aaron Wherry - Tuesday, March 5, 2013 at 11:12 AM - 0 Comments

Scott Clark and Peter DeVries explain all of the ways the federal budgetary process fails.

The two budget Bills associated with the 2012 budget were, to put it mildly, a disgrace and an insult to Parliament and to Canadians. The use of Budget Omnibus Bills has grown to the point that they seriously undermine the integrity and credibility of the budget process and the authority of Parliament. Little information is now provided in the Budget, so it has become impossible in reading the budget documents to fully understand what the government is actually proposing to do. There is a clear lack of transparency and accountability.

There is an urgent need to restore the role of Parliament and its committees in assessing, reviewing, and approving proposed legislation. Without sufficient information and clear intention of the proposed initiatives, Parliament and its Committees cannot properly assess the budget. Parliamentary debate is stifled, public involvement ignored and the implementation of good public policy prevented. 


See previously: Do you know how your government is spending your money?

About those estimates

By Aaron Wherry - Thursday, February 28, 2013 at 8:00 AM - 0 Comments

Yesterday, Tony Clement decided it was too early to make much of the main estimates. Scott Clark and Peter DeVries argue Mr. Clement’s previous pronouncement about those estimates should be disregarded.

The President of the Treasury Board tabled the Main Estimates for 2013-14 on February 26, 2013.  He claimed that “voted” expenditures were down $4.9 billion from that tabled for 2012-13 in February 2012.  Although his math is correct, the statement is extremely misleading…

Voted expenditures for 2013-14 are not directly comparable to those for 2012-13, as the former includes the impact of the various expenditure reductions announced in the March 2012 Budget.  The voted expenditures for 2012-13 were tabled before the March 2012 Budget and do not include any of the restraint reductions announced in the Budget.  The impact of these restraint measures on departmental spending was requested by the Parliamentary Budget Officer but refused by the Government.  No aggregate estimate of the March 2012 Budget expenditure restraint measures was provided in the Main Estimates for either 2012-13 or 2013-14 so that it is not possible to determine how much of the $4.9 billion decline was overstated. Given that the Estimates for these two years are not on the same basis, meaning that the statement that the 2013-14 voted expenditures are $4.9 billion lower than those tabled in 2012-13 is misleading.

‘He had no idea what he was getting into’

By Aaron Wherry - Tuesday, February 5, 2013 at 11:06 AM - 0 Comments

Scott Clark and Peter DeVries praise Kevin Page, but worry about the future of the Parliamentary Budget Officer.

Mr. Page has set a very high bar for any successor.

We are not at all optimistic about the future of the Parliamentary Budget Office. It is clear from Minister’s Flaherty’s comment that the mandate of the Parliamentary Budget Office will be changed. The Office will likely be fully assumed within the Library of Parliament with restrictions on what studies it can undertake and how these studies are to be made public. Under such a scenario, many of the current staff will move on. The ability of the Parliamentary Budget Office to challenge the Government will be compromised. Reports will not get done and the Parliamentary Budget Office we know will probably quietly disappear.

Parliament and Canadians will be the worst off for it.

The trouble with the budget

By Aaron Wherry - Tuesday, January 8, 2013 at 1:50 PM - 0 Comments

Scott Clark and Peter DeVries explain how to fix the budget process.

The use of Budget Omnibus Bills has grown to the point that they seriously undermine the credibility of the budget process and the authority of Parliament.  There is a clear lack of transparency and accountability.  There is an urgent need to restore the role of Parliament and its committees in assessing, reviewing and approving proposed legislation. Without sufficient information and clear intention of the proposed initiatives, Parliament and its Committees cannot properly assess the budget.  Parliamentary debate is stifled, public involvement ignored and the implementation of good public policy prevented.

The budget needs to be much more explicit on the proposed policy initiatives, providing sufficient details and background information on the proposed initiatives for Parliamentary assessment and for a better understanding by the public at large. Budget Omnibus Bills should be restricted to proposed tax changes only and all proposed spending initiatives should be presented either through the Main Estimates or through separate legislation, submitted to the applicable Parliamentary Committee for review.

Separately, they also pan the finance committee’s pre-budget consultations.

Trudeau and the GST

By Aaron Wherry - Monday, December 3, 2012 at 1:34 PM - 0 Comments

During his interview on CBC’s The House, Justin Trudeau ruled out an increase in the GST.

Evan Solomon: Would you raise the GST?

Justin Trudeau: I think middle-class families are already struggling too much under increasing costs, exploding personal and family debts. I don’t think raising the GST is a good idea.

Mr. Trudeau has promised an evidence-based, fact-based policy agenda. Stephen Gordon has argued that the GST cut has a lot to do with the Harper government’s budget deficit. Scott Clark and Peter DeVries have argued for raising the GST while cutting other taxes.

Budget projections are no longer worth worrying about

By Aaron Wherry - Friday, November 16, 2012 at 2:36 PM - 0 Comments

Whatever Tuesday’s economic update said, the Prime Minister says he still expects the budget to be balanced before the 2015 election.

“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.”

‘Unbelievable, unreliable and incredible’

By Aaron Wherry - Tuesday, October 30, 2012 at 10:33 AM - 0 Comments

Scott Clark and Peter DeVries review the Auditor General’s recommendations on fiscal sustainability.

In its response, the Department of Finance has agreed to publish fiscal sustainability reports for the federal government on an annual basis, by 2013 at the latest.  It will not, however, publish its long-term fiscal projections for the provincial governments, arguing that it is not accountable for their fiscal situations. In its latest report, the PBO concluded that, although the federal government’s finances are sustainable over the long term, the provincial governments collectively face a huge fiscal challenge. For some reason, the Minister Flaherty does not seem to be interested in the long-term fiscal sustainability of the total public sector in Canada.

To us, this is “unbelievable, unreliable and incredible”. Federal actions can have profound impacts on provincial finances (e.g., restraining the growth in the Canada Health Transfer from 6 per cent per year to between 3.5-4%). The Department of Finance should publish its sustainability reports for the provincial government sector. Who else is in a position to do so or has the responsibility to do so. There is only one taxpayer and it is extremely important that Parliamentarians and Canadians fully comprehend the implications of federal actions, not only on federal finances, but on the provincial finances as well.

Put the CEFIB out of its misery

By Aaron Wherry - Friday, October 26, 2012 at 10:00 AM - 0 Comments

Scott Clark and Peter DeVries hope C-45 marks the end of the Canada Employment Insurance Financing Board.

In the second Budget Omnibus Bill related to the 2012 Budget, the Government proposes to suspend the operations of the Canada Employment Insurance Financing Board (CEIFB) until such time the Employment Insurance (EI) Operating Account returns to balance. According to the 2012 Budget, this is not expected until 2016. Is this the end of the CEIFB? Lets hope so.

The CEIC was established in 2008 to “set EI premium rates for the upcoming year in a transparent fashion”. This has never happened. In every year since its creation, the Government has overridden the rate recommended by the CEIC through an Order-in-Council. In the March 2012 Budget, the Government proposed further changes to the EI rate-setting process. The employee EI rate is now to be limited to a 5 cent per year increase until the EI Operating Account is balanced. This precludes the CEIFB from setting rates for at least another four years.

‘Accountability and transparency have once again become irrelevant’

By Aaron Wherry - Tuesday, October 2, 2012 at 10:08 AM - 0 Comments

Scott Clark and Peter DeVries consider the parliamentary budget officer.

A strengthened (more resources), and more independent (report to Parliament) PBO would promote greater understanding of complex budget issues; it would strengthen credibility by encouraging simplification and forcing the government to defend its economic and budget forecasts; it would improve the budget process by promoting a straightforward and more understandable and open process; it would promote accountability by commenting on the government’s projections and analysis; finally, by being nonpartisan it would provide analysis and research to all political parties. 

Although the opposition parties have promised to make the PBO more independent, it is highly doubtful that the current government will make any changes to the mandate of the PBO. Accountability and transparency have once again become irrelevant. Indeed the government is more likely to weaken the mandate of the PBO. Kevin Page has set a high bar and much will be revealed in the appointment (if there is one) of the next Parliamentary Budget Officer. 

Idea alert

By Aaron Wherry - Tuesday, September 25, 2012 at 11:36 AM - 0 Comments

Scott Clark and Peter DeVries review the recent trouble with omnibus budget bills and suggest reforms.

First, the Budget Plan needs to be much more explicit on the proposed policy initiatives. The Budget should provide sufficient details and background information on the proposed initiatives for Parliamentary assessment and for a better understanding by the public at large and other interested parties. The Auditor General should be asked to review the adequacy of the information to be provided.

Second, Budget Omnibus Bills should include only proposed tax/revenue changes and issues related to borrowings. The House of Commons Standing Committee on Finance and the Senate Finance Committee should consider these. Third, all proposed spending initiatives should be presented either through the Main Estimates or through separate legislation and submitted to the applicable Parliamentary Committees for review.

Checking Jim Flaherty’s math

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.

Touché

By Aaron Wherry - Monday, February 13, 2012 at 8:30 AM - 0 Comments

On Friday, the Finance Minister referred to the Parliamentary Budget Officer as “unbelievable, unreliable, incredible.” On Sunday, Kevin Page responded.

For his part, Page stands by his findings that the federal government’s current system can sustain additional benefits for seniors. Waving away Flaherty’s disapproval, he suggested the minister was under a lot of stress… 

Subtly laying into the Conservatives, Page urged Flaherty to release a similar report to provide parliamentarians with more insight as to why OAS benefits are at risk. “This government in 2006 and (2007) was cutting taxes, increasing spending,” he said, referring to Harper’s first couple of years in office. ”All of a sudden we have a major fiscal crisis potentially headed (our way) because of an increase of recipients in old age security. I think that’s a bit disingenuous.”

Similarly, Scott Clark and Peter DeVries challenge Mr. Flaherty to release a fiscal sustainability report, as the Harper government promised it would five years ago.

See previously: What changed?

Q & A: critical experts wade in on the OAS debate

By John Geddes - Friday, February 3, 2012 at 12:30 PM - 0 Comments

A tough, detailed appraisal of the government’s plan to somehow curb Old Age Security spending is available today both on 3D Policy’s webite and over at iPolitics as a featured opinion.

It’s by two former senior finance department mandarins, Scott Clark and Peter DeVries, and brings badly needed clarity to the debate sparked by Prime Minister Stephen Harper’s surprise remark about his intention to reform pensions in his “major transformations” speech last week at the World Economic Forum in Davos, Switzerland.

Clark and DeVries argue that since the government has already clamped down on spending growth in big-ticket areas like defence and health, the projected rise in OAS costs isn’t by itself large enough to pose any real threat to federal finances.

Their commentary is well worth reading, but I also took the opportunity to interview Clark this morning for a less formal sense of how he sees this volatile debate unfolding. He brings the unique perspective of a former deputy minister of finance, and a key insider during the fight to eliminate the deficit back in the 1990s—when the Liberals decided against cutting seniors benefits as too politically risky.

Here’s part of our conversation, edited and condensed:

Continue…

Who pays for what?

By Aaron Wherry - Monday, January 16, 2012 at 4:41 PM - 0 Comments

In an interview with the CBC—to be broadcast this evening—the Prime Minister rejects the idea of a health care innovation fund (as proposed by Brad Wall and endorsed by Dalton McGuinty).

“What I think we all want to see now from the premiers who have the primary responsibility here, is what their plan and their vision really is to innovate and to reform and to make sure the health-care system’s going to be there for all of us,” Harper said, according to an excerpt from the interview. “So I hope that we can put the funding issue aside, and they can concentrate on actually talking about health care, because that’s the discussion we’ll be having.”

The idea of a separate fund for the provinces to use for innovation in the delivery of health care got no support from the prime minister. ”I’m not looking to spend more money. I think we’ve been clear what we think is within the capacity of the federal government over a long period of time.”

Meanwhile, in an interview with CTV yesterday, Mr. McGuinty mused intriguingly of “disentanglement.”

The feds do jails and we do jails. The feds do training and we do training. The feds inspect meat and we inspect meat. Why don’t one of us, alone, take responsibility for some of those areas. I think that introduces more efficiencies, it introduces more transparency, accountability is more easily evident. I think those are the kinds of conversations that we need to have going forward in an era of fiscal restraint.

The Ontario premier arrived at this point in response to a question about the Harper government’s crime policies and the burden they will place on the provinces, so perhaps this seems tangential to the health care debate. But maybe it’s all part of the same discussion. Consider the analysis of Scott Clark and Peter DeVries that I noted this morning. Continue…

Brand reform

By Aaron Wherry - Monday, January 16, 2012 at 10:33 AM - 0 Comments

If the Prime Minister is looking for advice, Scott Clark and Peter DeVries have already posted their budget submission.

Mr. Flaherty, you have recently referred to the need for politicians in Europe “to show political leadership and courage” to solve the EURO area’s problems.

Although Canada is not in a fiscal crisis, the federal government, nevertheless, does face policy challenges that will require that you also show political “leadership and courage” to address them. You will need to put ideology aside. You will need to reverse some past budget decisions. You will need to confront entrenched economic interests and do what is right for the economy. You will need to become more transparent and accountable, and you will need to make Canadians part of the policy development process.

Included in their recommendations is major tax reform: the elimination of special tax breaks, the elimination of EI premiums, raising the GST by two points and lowering both personal income and corporate taxes. They also advise deeper expenditure cuts, with that money reallocated to infrastructure spending.

Paying the bills

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.

‘Prudent planning’

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.

An opportunity to show real leadership

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.

Stephen Harper lectures the world

By Aaron Wherry - Thursday, October 13, 2011 at 2:50 PM - 13 Comments

The Prime Minister calls on Europe and the G20 to get their respective and collective houses in order.

Events in the summer of 2011 have made it clear that global economic challenges are by no means behind us. What started as a sovereign debt crisis in smaller countries in Europe has now spread, causing extreme stress in the European financial sector and threatening global growth. Unfortunately, this time, the policy response to our shared challenges has not been as strong and co-ordinated as it needs to be. This slow response has resulted in missed opportunities, with each missed opportunity increasing the cost and difficulty of resolving the crisis.

We cannot afford any more missed opportunities.

Last month, Scott Clark and Peter DeVries noted that Mr. Harper was among those leaders calling on “surplus” countries “to increase their expansion of domestic demand” and thus wondered whether the Prime Minister was willing to participate in a global stimulus package (to the tune of $41 billion).