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

Tofino mourns sudden loss of municipal councillor and community champion

Longtime resident Dorothy Baert died on Wednesday.

Short documentary showcases Chez Monique’s on Canada’s West Coast Trail

“The story we are trying to share is of the loving haven they created and sustained for decades.”

Confirmed case of Parvovirus could spread through Tofino-Ucluelet puppy population

“We need to keep this contained and the animals within communities need to stay at home.”

Construction continues on Pacific Rim National Park Reserve’s $51M trail

Path through Park Reserve will link Tofino and Ucluelet.

Tofino graduate credits family and community after receiving $40K scholarship

“I would not be here and I would not be the person I am without my community.”

Feds lowered poverty line, reducing the number of seniors in need: documents

Liberals introduced a poverty line that was below the prior low-income cutoff

BCHL: Alberni Valley Bulldogs have been sold

Victoria company has purchased BCHL team, but will keep it in Port Alberni

“Does Kirby care?” B.C. First Nation’s group using geo-targeted ads in Houston, Texas for justice

The Heiltsuk Tribal Council has called out Kirby Corporation for the Nathan E. Stewart oil spill

Trudeau announces $79M investment for 118 more public transit buses across B.C.

Contributions from municipal to federal level to fund more buses in a bid to cut commutes

B.C. woman wins record $2.1 million on casino slot machine

‘That night was so surreal … I wasn’t able to sleep or eat for the first two days,’ she said

After B.C. dad’s death, Technical Safety BC wants changes to trampoline park rules

Jay Greenwood, 46, did ‘a series of acrobatic manoeuvres prior to a fall that caused serious injury and cardiac arrest’

Cars keyed on BC Ferries after alarms bother dog on board

Delta police arrested one passenger on suspicion of mischief

$900M settlement reached in class action on sexual misconduct in Canadian military

After facing criticism, the government moved to begin settlement proceedings in early 2018

Most Read