In the middle of the worst economic storm in decades, Finance Minister Jim Flaherty is flying blind. But would the Liberal-New Democrat coalition cobbled together by the opposition last fall have fared better?
As eye-catching as a projected record $50 billion federal deficit may be, the actual revised figure of the budget shortfall is not what is most disquieting about this week’s revelations.
Starting from the same fiscal situation last January, the opposition coalition would have run up a tab of at least the same magnitude by now.
Indeed, in light of the budget critiques of the three opposition parties, the deficit would likely be higher than the adjusted figure Flaherty put forward.
Since the budget, the Liberals, the NDP and the Bloc Quebecois have been calling daily for more stimulus – not more restraint and certainly not more spending controls.
While Jack Layton talks gamely of how the Conservatives should have reallocated the money spent on corporate tax cuts to other programs, the NDP leader had agreed to take that very option off the table of the coalition last year.
As for the Liberals, they vaguely hint they would have done things differently. But in the absence of a comprehensive alternative to the Conservative economic action plan, that assertion is, at best, gratuitous and, at worst, misleading, given the recent bid by the Liberals to immediately increase spending on employment insurance.
Worse than a deficit ballooning from $34 billion to $50 billion over four months is the fact that Flaherty apparently did not spot a huge tide of extra red ink until he was awash in it.
That comes with the equally disquieting notion that there is no guarantee the numbers will not be significantly different – one way or the other – come next fall.
By the measure of this week’s huge deficit correction, there is also no reason to have any confidence that the job creation estimates the government put forward to justify the billions of borrowed stimulus dollars it’s sinking into the economy amount to anything other than wild – rather than educated – guesses.
Alas, Flaherty is only the latest of an unbroken chain of federal finance ministers whose budget forecasts proved not to be worth the paper they were written on.
When Jean Chretien was in power, the Liberals actually showcased one fiscal narrative during an election campaign and a much different one at budget time.
Time and time again, their forecasts turned out to be off the mark, their only saving grace being that, in the midst of an unprecedented period of prosperity, they systematically erred on the surplus side.
Over the course of 11 years of mostly Liberal rule, Canada raked in 10 surprise surpluses for an official total of $85 billion worth of unexpected federal revenues. In a 2008 analysis, the Certified General Accountants Association of Canada found that if the governments of the day had not gone on year-end spending sprees, that windfall would have totalled $135 billion.
If the finance department was not up to the task of getting an accurate fix on a growing economy a single time in a decade, it is any wonder that it cannot chart the impact of a global recession?
The Liberals used the surplus era to put the federal government in the spending fast lane.
Once they were in power, the Conservatives recklessly put their foot on the accelerator by twice cutting the GST. But neither Stephane Dion last fall nor Michael Ignatieff this spring have given indications that a Liberal government would reverse course rather than drive the federal treasury further into debt.
Chantal Hebert writes for The Toronto Star Syndicate.