Just in time for an election: Surplus

The previous string of balanced budgets lasted nine years during the Chrétien/Martin era – something of an aberration, considering the majority of federal budgets in the past 40 years have not balanced.

Perhaps Canadians should be asking themselves if balanced budgets are doomed to be an aberration in Canadian fiscal policy. Or could they become the new normal?

Sure, the Harper government signalled its intention in the October throne speech to pass a law prohibiting deficits except in extraordinary circumstances. But such a law is likely to have enough loopholes and trap doors in it to mean Ottawa can continue to run a deficit any time it wants.

The answers may be found in Ottawa’s spending patterns, not in economic conditions. And given Ottawa’s spending habits in the past seven years, you have to wonder if a balanced budget could not have come sooner.

Let’s start with Treasury Board, the guardians of how tax dollars are spent. The auditor general reported last spring that this board has allocated $12.9 billion to various departments for anti-terrorism measures since 2003. However, the Treasury Board could not produce documentation to show how $3.1 billion of that was spent.

Where did it go? Did it wind up in a slush fund somewhere? Or was it spent in a manner that might embarrass the Treasury Board? Your guess is as good as mine. But whatever it was used for probably does not represent value for money.

Suppose that money became available to the treasury. The deficit for 2014-15 would be projected to come in at much less than the projected $5.5 billion. If the $3.1 billion had been designated as surplus, it could have been used in the coming fiscal year to put the deficit within striking distance of being a small surplus.

Officially, deficits are something governments use during extraordinary times. The recession of 2009 was certainly one of those times. But was it really necessary to go from the whopping big surplus of 2007 inherited from the Liberals to a deficit – and then to one of record size?

Maybe not. According to the Parliamentary Budget Officer’s Office, the civil-service bureaucracy ballooned by 34,000 employees between 2006, when the Conservatives took office, and 2012. The Treasury Board’s staff jumped by 163% in that period. (Maybe the Treasury Board was too busy keeping track of all its new employees to keep track of the $3.1 billion.)

The current government likes to talk a lot about cutting back on bureaucracy, and all that talk has obscured the sprawling growth under the Conservatives. The bureaucracy is now 13% larger than it was two decades ago.

In another troubling development, the Parliamentary Budget Officer now wants to know why the federal bureaucracy has been unable to spend about $10 billion in budgeted funds in each of the past three years. This seems to indicate that overbudgeting is entrenched.

The Tories also seem loath to give credit where it is due when it comes to innovative ways to save public money not spearheaded by them.

This autumn, for example, more than 25 First Nations communities are tapping bond markets for $100 million-$150 million in investment-grade securities, thanks to the creation of a central borrowing agency for First Nations under legislation that went into effect under the Liberals in April 2006. So far, there has not even been a word of congratulation by Aboriginal Affairs Minister Bernard Valcourt to the First Nations Finance Authority.

But such initiatives could lead to the eventual development of a vigorous First Nations economy, with aboriginals far less dependent on an army of more than 5,000 bureaucrats at Aboriginal Affairs.

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