It’s hard to track Liberal spending

There’s no doubt the list of Liberal pre-election spending announcements that the Conservatives are tallying up involves somewhat spurious math. Even they will admit that.

They’ve lumped together last week’s $22 million for an urban climate centre in Edmonton with $2.2 million for high-speed internet access in eastern Ontario.

Those and many, many more expenditures add up to a grand sum of $16.3 billion, announced in 161 events so far since July 1, the day new pre-election restrictions on party spending kicked in.

That’s about nine announcements a day — raising the profile of the Liberals at an opportune time in the electoral cycle and at a time when the Conservatives’ own spending on self-promotion is curtailed by new legislation, despite the party being flush with donations.

The point of the math is to show largesse and not really to come up with a reliable total.

Conservative officials are quick to point out that some of the spending can be traced to the last budget. Some of it may have been booked a few years ago and is just being detailed now. Some of it will be spread out over many years, and some of it will be spent all at once.

Apples and oranges, as they say.

But it’s next to impossible to trace the precise origin or spending profile of all of it, raising questions about transparency and what the federal finances will look like by the time the next government gears up. If there are fiscal implications, we won’t know for months.

According to Finance Minister Bill Morneau, most of the recent spending is spelled out on the books in one way or another. And the reason for the rush of announcements is tidying up unfinished business.

“What you’re seeing really is the decisions that we’ve come to over the course of the last three and a half or four years, and in many cases, what that means is that we’re getting things done that we wanted to get done.

“Some of it happens to be in the course of this summer,” he said in an interview.

Does any of it affect the bottom line? Is there new spending that hasn’t been accounted for previously that would make the deficit bigger than we think?

He suggests not, but he won’t really say.

“You’re seeing overwhelmingly things that are from Budget 2019, but, in some cases, you’re seeing some things that were rolled out in earlier budgets that were infrastructure budgets … We had to get agreements with the provinces. Sometimes, those take time,” he said.

But during his term as finance minister, Morneau has enthusiastically spent any extra revenue that has come Ottawa’s way — not waiting for a budget before earmarking the healthy tax windfalls that have fallen in his lap and following up with a fancy ribbon-cutting event or two.

This isn’t unique to him, of course. A new analysis of federal and provincial government spending and revenue collection over the years underlines the risks associated with this lack of transparency — and it runs in the billions of dollars.

Analysts at the C.D. Howe Institute looked at 18 years of federal and provincial spending habits and found that, since 2000-01, governments spent $91 billion more than they budgeted for.

They also collected a lot more tax revenue than they anticipated in their budgets — to the tune of $142 billion.

Policy analyst Farah Omran says her data-crunching shows the federal government collects and spends more than it budgeted for 70 per cent of the time.

What’s happening here? On the revenue side, Finance officials are generally quite conservative and risk averse. They don’t want to get caught short and they don’t want to get into a difficult financial position if there’s an unexpected crisis. So they tend to lowball.

On the spending side, politicians are quick to take the extra money when it comes along — especially if the spending won’t noticeably jeopardize their deficit targets.

Morneau did that last fiscal year. Revenue was coming in much stronger than expected and he directed a good chunk of the extra to a suite of measures to make Canadian companies more competitive, rather than letting the windfall go toward the deficit.

There are two problems with this kind of budgeting, Omran points out. Allowing the public purse to act as an offset to the ups and downs of the economic cycle — counter-cyclical spending, in economists’ jargon — is now passe.

And there’s so little transparency that the public and policy-makers have trouble with oversight of taxpayers’ money.

“Governments have considerable scope to manage the bottom line by adjusting expenses or massaging the numbers to achieve a preferred result,” Omran and co-author William Robson wrote.

There’s a political problem too, which we see unfolding before our eyes. Without the transparency the Liberals need to have credibility in budgeting, they leave themselves vulnerable to cynicism about their pre-election spending.

Voters have seen too many new governments elected on fiscal promises only to find those promises walked back when the new finance minister “uncovers” a hidden deficit left behind by her predecessor in a pre-election spree.

The Conservatives are already building that case.

Heather Scoffield is a columnist with Torstar Syndication Services.

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