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 , signed off by Auditor General Michael Ferguson.
鈥淭he 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,鈥� the report says.
鈥淩evenues 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.鈥�
The Conservative government鈥檚 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 鈥渟urprise surplus鈥� 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鈥檚 surplus was partly generated by cuts to Veterans鈥� Affairs and Aboriginal Affairs. Wrong and wrong. Veterans鈥� Affairs spending was up 13 per cent, and Aboriginal Affairs spending rose nearly 30 per cent.
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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 鈥渟hovel ready鈥� infrastructure, as did the U.S. and other countries. The question raised by Trudeau鈥檚 plan is whether it鈥檚 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鈥檚 operating debt is now equal to 91 per cent of its Gross Domestic Product.
Canada鈥檚 net debt-to-GDP ratio is currently around 30 per cent, down from frightening levels in the 1990s before the Chr茅tien 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鈥檚 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鈥檚 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鈥檚 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:
