Operating deficits piled up from the Pierre Trudeau years through the 1980s and early 1990s

Do balanced budgets really matter?

Stephen Harper may have engineered the sudden surplus confirmed last week, and Justin Trudeau wants to return to deficits

The federal election campaign has produced a jumble of conflicting claims about whether or not Canada has a balanced budget or a deficit, how it was determined, and whether it even matters.

The definitive word on this came out last week, with the release of the Government of Canada Annual Financial Report, signed off by Auditor General Michael Ferguson.

“The government posted a budgetary surplus of $1.9 billion for the fiscal year ended March 31, 2015, compared to a budgetary deficit of $5.2 billion in 2013-14,” the report says.

“Revenues increased by $10.7 billion, or 3.9 per cent, from 2013-14, reflecting increases across all major revenue streams. Program expenses increased by $5.2 billion, reflecting increases in major transfers to persons and other levels of government, offset in part by a decrease in direct program expenses.”

The Conservative government’s pre-election budget calculated that last year was in deficit, and this year would be the first in the black since 2008. Ottawa pundits say this “surprise surplus” was engineered with intentionally pessimistic budget estimates, so Prime Minister Stephen Harper would get a boost right about now.

Liberal leader Justin Trudeau claimed last year’s surplus was partly generated by cuts to Veterans’ Affairs and Aboriginal Affairs. Wrong and wrong. Veterans’ Affairs spending was up 13 per cent, and Aboriginal Affairs spending rose nearly 30 per cent.

(See page 16 of this report for details.)

Trudeau has also insisted Canada is in recession now, which helps his suddenly adopted position that a Liberal government would run deficits for the next three years to build infrastructure.

Harper ran the biggest deficits in Canadian history after the 2009 crash, bailing out auto makers and building lots of “shovel ready” infrastructure, as did the U.S. and other countries. The question raised by Trudeau’s plan is whether it’s a good idea to keep doing that without a financial crisis.

France, for example, has run operating deficits every year since the early 1970s, although the current Socialist government vows to balance the books by 2017. France’s operating debt is now equal to 91 per cent of its Gross Domestic Product.

Canada’s net debt-to-GDP ratio is currently around 30 per cent, down from frightening levels in the 1990s before the Chrétien government finally balanced the budget.

(Fun fact: then-finance minister Paul Martin not only cut transfers to provinces, unlike the current government, he inflicted the largest-ever cuts to the CBC. Harper’s CBC cuts were part of government-wide reductions, again due to that 2009 crisis.)

NDP leader Thomas Mulcair has promised to balance the budget every year of his mandate, should he form Canada’s first-ever socialist government. He will spend the rest of the campaign trying to reconcile this promise with the grandiose spending plans he has piled up.

Meanwhile in B.C., Finance Minister Mike de Jong may have benefited from Harper’s lowball budget. In his first quarter update last week, de Jong reported that his February budget forecast is on track, with a $277 million surplus.

This is despite a $300 million bill for forest firefighting, thanks to personal and corporate income tax revenue expected to be $374 million higher than budgeted. B.C. bases its tax revenue figures on federal estimates, and the ones they got early this year were clearly low.

Understated or not, this is a nice problem to have. De Jong says that at the current pace, B.C. will pay off its accumulated operating debt by 2020.

The last time the province was free of operating debt was 1982. The big debt peak came during the NDP 1990s, with another spike from 2009 to 2013 under the B.C. Liberals.

Tom Fletcher is legislature reporter and columnist for Black Press. Twitter: @tomfletcherbc

Just Posted

Revelstoke Skating Club hosts Christmas performance

The Revelstoke Skating Club hosted their annual Christmas performance last Thursday evening.… Continue reading

Ballet Victoria comes to Revelstoke

Local dancers joined professionals in The Nutcracker

CP Holiday Train stops in Revelstoke

The CP Rail Holiday Train came through Revelstoke on Friday evening. Get… Continue reading

Busy day for Penticton Search and Rescue

PENSAR was called to three separate incidents Sunday, Dec. 16

Yellow Vest movement rallied in Vernon Saturday

Protesters took to the steps of the Vernon courthouse Saturday.

Some types of cauliflower, lettuce recalled over E. coli fears

The Canadian Food Inspection Agency announced recall because of possible contamination.

Ryan Reynolds to narrate movie about B.C.’s Great Bear Rainforest

Vancouver-born actor known for Deadpool movies will voice film to be released Feb. 15, 2019

Airline passengers could get up to $2,400 for delays, damaged bags: Canadian agency

Canadian Transportation Agency is releasing draft regulations for public feedback

Top of mind: ‘Justice’ is Merriam-Webster’s word of the year

Merriam-Webster has chosen “justice” as its 2018 word of the year, driven by the churning news cycle and President Trump’s Twitter feed.

‘Spider-Verse’ swings to the top; ‘Mortal Engines’ tanks

“Spider-Verse” has been very well-received among critics, and audiences in exit surveys gave it a rare A+ CinemaScore.

Canadians spent almost $64,000 on goods and services in 2017

Households in B.C. each spent $71,001 with housing costs contributing to higher average

Speaker at rally says Alberta oil ‘puts tofu on the table in Toronto!’

RCMP estimated more than 1,500 people attended the rally in Grande Prairie

White House closer to partial shutdown with wall demand

Without a resolution, parts of the federal government will shut down at midnight on Friday, Dec. 21

Canucks score 3 power-play goals in 4-2 win over Oilers

Vancouver sniper Boeser has 6 goals in last 5 games

Most Read