Election promises are being made in the context of ever-increasing program spending and very unreliable forecasting, says the the C.D. Howe Institute says in a new report. The think tank says that this spending must be reined in, and economic forecasting vastly improved.

The group says that the, “major political parties are unveiling their multi-billion dollar spending wish lists for the next parliament against an ominous backdrop – out-of-control federal expenditures.” Spending has grown out of control as government forecasts have consistently under-estimated surpluses, which are then consumed by additional spending.

According to the report by William Robson, senior vice president and director of research, Ottawa’s program spending began swelling around 2000 and has exploded in recent years. For example, the average government department spent 50% more on operations in 2004/05 than in 1999/2000. Other categories of spending showing double-digit annual growth rates since 2000 are: transfers to other governments (12.5%) and Crown corporations (over 11%).

“This backdrop of unreliable projections and surging spending has lowered the level of the election debate,” it argues. “Straightforward questions about the consistency of party platforms with balanced budgets are impossible to answer when the baseline is so uncertain.”

“It also affects the fiscal choices the parliament Canadians elect on January 23rd will face,” the report adds. “The budget overruns of the past five years have already robbed Canadians of key opportunities. Debt that we could have paid down is still outstanding. Federal-provincial transfers that we could have streamlined continue to promote friction and unaccountable policy paralysis. Taxes that we could have reformed still discourage work, saving and investment.”

The report warns that, “If the 1970s-style increases in handouts, subsidies and operating costs continue, simply repairing the damage will be a huge task for the next government.”

And, it says that creating a budgeting framework that gives Canadians reliable figures to work with, “is an urgent priority for the next parliament”.

“Budgets are not trivial items to be voted and forgotten. They are cornerstones of accountability for public money,” it says. “Avoiding deficits, designing a more effective system of intergovernmental transfers, reforming taxes to support growth — to achieve these goals, Canadians need a federal government that can control its spending.”