TRYING TO MAKE SENSE OF THE NUMBERS FROM OTTAWA CAN OFTEN BE CHALLENGING.
In Ottawa, budget season is a funny time. Speculation is everywhere whereas real data is hard to find. This year the federal government unleashed a bit of a surprise on journalists and stakeholders with an announcement that gave participants only a week to prepare for budget day.
On March 14th it was quietly announced that the government’s fiscal plan would be tabled in Parliament the following Thursday, the 21st. Outrage ensued. How can we expect to prepare for such an event with only seven days’ notice? The sense of panic was underscored by an assumption that has lost most of its relevance in recent years: that the budget actually sheds any real light on the government’s fiscal policy. Increasingly, it does not.
NOT SO SECRET?
Budget secrecy is a longstanding hallmark of our system of government. For political and economic reasons, it is entirely justifiable to keep the details of the budget under wraps until it is announced. Governments do not want to leak any information that may move markets one way or another before everyone has the advantage of the fiscal details contained in the budget. Governing parties want to afford their opponents as little time as possible to analyze the document before having to comment on it publicly.
But increasingly, so-called budget secrecy is undermined by two factors: governments’ frequent habit of telegraphing budgets’ juiciest bits weeks — if not months — ahead of time to friendly reporters, and; the fact that once released, modern budgets represent at best, shots in the dark in terms of fiscal projections and government agendas, and at worst deliberate obfuscations.
In terms of fiscal projections, some leeway is granted. Predictions are hard, especially when they’re about the future. In this space I have often defended those under attack for predictions that failed to materialize in full. Predicting the future is, after all, impossible. That said governments, just like businesses, have to set policies based on certain assumptions about revenues and expenditures in the near term.
But now more than ever, those projections look like political rather than economic tools when it comes to governments’ budgets. A massive deficit is projected to shrink progressively each year until — a safe distance down the road — it becomes a surplus. Exactly how such a swing is meant to take place is never really explained.
VARYING PREDICTIONS
If you were to go back and look at the projections contained in the last half dozen or so federal budgets, from one year to the next they vary wildly — from one another and from reality. Just a few months ago the government was predicting a deficit for the fiscal year that just ended that was billions more than it turned out to be. Whether this was the result of cautious forecasting or political number-spinning is up for debate.
In the past the federal government was criticized for low-balling surpluses to justify year-end
spending sprees. How distant those days appear now. But low-balling a surplus to justify billions in goodies is not all that different from high-balling a deficit to cast yourself as a legendary deficit slayer once the numbers come in at a fraction of what had been “forecasted.”
Perhaps even more discouraging than the idea of nefarious administrators cooking the numbers in Ottawa is something many commentators have considered: that modern public administration in a huge, wealthy, and advanced country like Canada is so complex that no one really knows where the money is going. The federal government is Canada’s single biggest institution, and is made up of countless layers of programs, budgets, personnel, agendas, regions, and dozens of other factors. Some will argue it’s asking too much that we accurately account for the almost $300 billion it allocates every year.
While some slippage in a budget of that size is expected, it would be a shame to write off the entire functioning of the federal government as irredeemably opaque. Most observers are not ready to throw in the towel and declare a federal government worth close to a fifth of our nation’s annual output completely divorced from accountability. But that should not make us complacent. There is a problem in Ottawa’s culture of fiscal secrecy and it’s getting worse.
