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

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

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

(File photo)
High-visibility arrest in Williams Lake nets BB gun, mistaken for assault rifle

RCMP thought the man was carrying an M16 assault-style rifle

letters
LETTER: Improvements needed at Scout Island

The City can do better managing their responsibilities

More than 14,800 COVID-19 vaccines have been administered at clinics in Williams Lake, Alexis Creek, Big Lake, Horsefly, West Chilcotin, 100 Mile House and Clinton as of Friday, May 7. (Monica Lamb-Yorski photo - Williams Lake Tribune)
6,000-plus people vaccinated for COVID-19 in Williams Lake, and in 100 Mile House

Interior Health Authority provide the numbers up to May 7, 2021

As a former reporter and editor at the Tribune, Diana French carries on sharing her ideas through her weekly column. (Photo submitted)
FRENCH CONNECTION: Reasonable decision making can go a long way

We’re all at fault, but today I’ll pick on politicians

Lorne Doerkson is the Liberal MLA for the Cariboo-Chilcotin. (Black Press Media file photos)
MLA’s CORNER: Be thankful for volunteers

It amazes me just how much people do to make the Cariboo Chilcotin region a better place for all

A bullet hole is seen in the windshield of an RCMP vehicle approximately 4 km from Vancouver International Airport after a one person was killed during a shooting outside the international departures terminal at the airport, in Richmond, B.C., Sunday, May 9, 2021. THE CANADIAN PRESS/Darryl Dyck
Homicide team IDs man in fatal YVR shooting as police grapple with spate of gang violence

Man, 20, charged in separate fatal shooting Burnaby over the weekend

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

The Canadian Forces Snowbirds are in the Comox Valley for their annual spring training. Photo by Erin Haluschak
Suspected bird strike grounds Snowbirds plane during training in B.C.

Pilot followed protocols and landed the aircraft on the ground without any problems

BCIT. (Wikimedia Commons)
BCIT apologizes after employee’s ‘offensive and hurtful’ email leaked to Métis Nation

BCIT says employee’s conduct has been investigated and addressed

An adult male yellow-breasted chat is shown in this undatd photograph on lands protected in collaboration between the En’owkin Centre and Penticton Indian Band with support through ECCC. The rescue from near extinction for a little yellow bird hinges on the wild rose in British Columbia’s Okanagan Valley, a researcher says. THE CANADIAN PRESS/HO, A. Michael Bezener/ En’owkin Centre 2020 *MANDATORY CREDIT*
Rare yellow birds need wild roses to survive in British Columbia: researcher

The importance of local wild roses emerged over a nearly 20-year experiment

RCMP officers search around rows of luggage carts as screens block off an area of the sidewalk after a shooting outside the international departures terminal at Vancouver International Airport, in Richmond, B.C., Sunday, May 9, 2021. THE CANADIAN PRESS/Darryl Dyck
Police say gang conflict in Metro Vancouver may be behind shooting death at airport

Police said this generation of gangsters is taking things to new level and have no regard for community safety

RCMP are looking for information on an alleged shooting attempt near an elementary school in Smithers March 10. (Phil McLachlan/Capital News/Stock)
UPDATE: Man killed in brazen daylight shooting at Vancouver airport

Details about the police incident are still unknown

Pieces of nephrite jade are shown at a mine site in northwestern B.C. in July 2019. THE CANADIAN PRESS/HO-Tahltan Central Government MANDATORY CREDIT
Indigenous nation opposes jade mining in northwestern B.C.

B.C.’s Mines Act requires operators to prepare a plan to protect cultural heritage resources

The body of Brenda Ware, 35, was found along Highway 93 in Kootenay National Park on Thursday, May 6, 2021. (RCMP handout)
RCMP ask for tips after woman’s body found in Kootenay National Park

Brenda Ware was found along Highway 93 in the park, 54 kilometres north of the town of Radium

Most Read